Tax season is upon us, so now is when you traditionally feel your stress levels increase at a geometric rate. The reason most small to medium sized business (SMB) owners experience so much stress at this time of year is because it means assembling vast amounts of documentation, filing it in a sensible way, and then preparing your tax return. However, filing your tax return each year doesn’t need to involve this many potential headaches for you, or at least it wouldn’t if you were scanning your financial records in advance.
So, you can put your plans for moving to South America under an assumed identity. We’re kidding, obviously, but we do understand just how stressful tax season can be for a business owner – at BIS, we’ve worked with enough of them to experience this first-hand.
Here are the main reasons why it makes far more sense to use document imaging as part of your tax returns process:
#1 Professionals do it
We don’t mean to imply that you’re not a professional, but what we do mean is that over 80% of tax preparation professionals use digital documents to file their customers’ returns. So, regardless of whether you’re filing a paper-based tax return or not, you should absolutely ensure that your tax preparer has electronic copies of everything you send them (and you should keep a digital copy safely stored for yourself). If they don’t, ask them why they’re not using the most reliable form of document imaging and storage. Then, follow their example by implementing the same strategy in your own business.
#2 Instant access
Yes, you have to file your tax return each year, but what would happen if you had an unexpected IRS audit? Would you have any hope of assembling several years’ worth of files, invoices, receipts and other elements of your bookkeeping system, in time for such an audit? If you’re using a paper-based filing system then an audit of this type will bring your business to an abrupt standstill. Businesses that use electronic document scanning don’t have those kinds of headaches – their documents are available to them locally, or via a cloud-based file system (like the type of service BIS offers), 24/7/365.
#3 Save time
Even the most highly organized paper filing system is a nightmare to navigate when it comes to tracking down that one single record or invoice that could hold up your entire tax return. You have to go to great lengths to delete an electronic record, and even when you do it’s always retrievable. Modern document scanning techniques are far more sophisticated than simply converting a document into an image or PDF file – the latest OCR (optical character recognition) algorithms are not only capable of recognizing numeric values, but calculating them too, if necessary. BIS uses the world’s most modern platform for OCR and to verify various fields contained on a document.
#4 Easy searches
Let’s say you are trying to find that one document holding up your entire return. In front of you are rows of filing cabinets that might contain the very document you seek. As an executive in your business, it might interest you to know that:
- The average executive wastes six weeks annually searching for important documents they’ve misplaced.
- According to AIIM, the Global Community of Information Professionals, companies spend:
- $20 in labor to file a document
- $120 in labor to find a misfiled document
- $220 in labor to reproduce a lost document
- 5% of all documents get lost and 3% of the remainder get misfiled
The beauty of having a well-designed imaging system for your all of your business records is that it makes search and retrieval simple and fast. A few keywords or numbers could have the very document you’re after in front of you in seconds!
#5 Scan once – use many times
Each document only needs to be scanned once, whereas you probably print several duplicates of the same documents before filing your tax returns – disposing of the copies once you’re done. You are literally burning money by doing this. The point here is that there is a time investment involved in scanning your financial records (thought often times – that’s less than you might think), but it’s a once-off project. Those same financial records can be retrieved now, or 10 years from now, with just a few clicks of your mouse.
The issue faced by most businesses is that they lack the equipment and expertise to efficiently and effectively create digital copies of their financial records. There’s far more involved than just buying a high quality scanner, and then passing the buck (and all the work) to the IT person or a staffer in your office. You need world-class expertise to make document scanning work for your business, and not against it, especially during tax season. That’s where BIS can help!
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