Paper-free; a lofty goal that many small businesses aspire to, but it seems a fanciful notion when so much of how we function on a day to day level with the stuff.
Paperwork can be synonymous with small business, and between the finance, compliance and HR aspects the thought of going paper-free can seem impossible. It’s not about going through the last five years of receipts and losing days of your life in front of your scanner to digitise all the documents, but rather like many changes in your business drawing a line in the sand and starting afresh.
You’d be surprised how much you already do paper free. Your emails, data storage and calendar are successfully operating digitally so why not the financial aspects of your business?
Firstly, its important what aspects in which, from a compliance perspective you’re permitted to be paper free. Many businesses didn’t realise a few years ago the ATO decided that all evidential documents (your receipts etc.) could be digital. And even the seemingly archaic legal fraternity are happy to communicate with you as a small business via emails. There are in fact few documents in business which must remain in hard copy.
The reason is you may need to produce them for legal or auditing reasons. Tax-related documentation needs to be kept for five years and legal, seven years.
What HAS to be in hard copy?
Strangely, if you still use the ATO pink Tax File Number (TFN) declaration forms from your employees and “ink” them (an old-fashioned term for putting pen to paper) you actually need to keep this specific form for five years. However, if you completed this same process in an accounting system through the integrated ATO form online there is no need for paperwork at all.
EVERYTHING else can be digital. Receipts, ATO lodgement documentation, certificates of insurance, employment contracts, bank statements… And you can reduce the amount of paper snail-mailed too simply by asking for digital copies rather than hard copies.
BUT (there’s always a but) if you sign something with “ink” you need to keep that hard copy for seven years (or five years if tax related).
Top tips on going Paper Free
- Set up a digital receipt evidence system – there are some great software products on the market now which not only securely keep your receipts and accompanying documents digitally, but also process them! Without you even opening the document in the software they can detect the date, the amount, the type of document the GST amount and method of payment – then publish this data to your accounting software. Shoeboxed and ReceiptBank are a couple of great examples. They have the added benefit of double storing your documents since they often publish the image as well as the data.
- Sign everything digitally with your accountant, legal team, employees etc and then you don’t have to store hard copies of them for years on end. Accountants have software which enables you to sign digitally (often by clicking in a specified area on the page and you can apply your own signature in Adobe PDF and within Preview on a Mac).
- Set up a reliable system for storing your digital documents. There are document copying services which will scan and store if you want to action this retrospectively like Google Drive or a similar cloud-based storage system (where you can increase the capacity as required) is sufficient.
- Remember when storing receipts there’s no need to rename them with a date or description; you’re just storing them and it is unlikely you’ll be referring back to them.
What’s extremely important to remember is that digital storage, just like hard copies are not fallible. They might not fade, rip or get eaten by the family dog but there is still potential for a digital disappearing act. Like all things avoid the free products; without paying for a service you can’t be sure your documents are secure, safe and accessible in years’ time.