Paper Beast

When I ran my business out of an office, I was meticulous about keeping good records and keeping them organized. As my business grew, that process became very demanding of my time. It was important since I was managing money for individuals on a non-discretionary basis and so I could be audited at any time— and I was ready (I am required to keep client records for 7 years). But I knew I had come to the tipping point when my assistant said that she couldn barely squeeze another file folder into our filing cabinets that lined almost every wall.
I knew I didn’t want to be like my friend, an immigration attorney who had a garage filled with client records that she was required to keep. I had other business colleagues that had gone paperless and they were sharing their strategy online. I figured now was the time to go “paperless” and I researched it and decided to do this in-house by buying a commercial scanner and a software program (PaperPort). I hired college interns to feed that scanner all day and into the night. We had lots of late night pizza meetings to decide how best to organize the electronic file folders. Joseph thought I was crazy to take this on when my plate was more than full with other activities but I wanted to keep our garage from turning into a self-storage unit. The process wasn’t that difficult once it was up and running and I had my eye on turning our home office into a paperless environment once I was done with the business. Can you tell that I hate clutter?
I was about 60% done when I had got into a car accident and ended up transfering the business to another competent Advisor who had similar services. That paperless trail was a blessing for Joseph to be able to access information and files and client databases so that he could sell my business for me. It also represented to the buyer that I had a solid business with good records.
Now I look around at my home office filled with books, and papers in boxes around me, and I am thinking of a paperless project to get rid of this clutter. Seems like this paper beast just follows me around.
Tips:
get all of your bank statements, and brokerage statements delivered electronically. Copy these and store on your own computer since they only keep the file for a few months. Before you do this, make sure you have good virus protection, your firewall in on, and you have spyware installed.
The IRS can audit you up to three years after you file or six years if income has been substantially understated or seven years if you have sold real estate.
Documents showing contributions to IRA accounts should be kept for many years untill all the money is withdrawn from that account.
Keep good documents on improvements to your home until the house is sold. It will help to increase your basis and lower your tax in the future.
Ask for brokerage account maintenance fees to be waived if you go paperless. They are saving substantial money so they should pass the savings on to you (not charge you as some do).
Many fund companies or brokerages will donate money to environmental organizations when you go paperless.
Going paperless doesn’t mean going blind. Check your statements. I check quarterly to make sure all is well and nothing is out of sorts.
Get a shredder and experience the joy of getting rid of old documents. Get the kids involved. They love to shred!
Don’t forget to back up everything! We use a free online service called Mozy. Some people use CDs, some DVDs, and some use tape backup.
Whatever medium you use, make sure you use it consistently.
Let’s all stop the paper beast from growing!
Coaching Question- What would it mean to you if all of your financial records were organized and available to you at the click of a mouse?