Keeping Tax Records & Going Paperless

Going Paperless

Sometime ago, I began to realize that in my home office, I have limited space for the storage of paper records and made the decision to go as paperless as possible.  To do this I had to change/enhance a number of things:

  • My methods of computer filing.  My hard drive now has an extensive system of folders and subfolders, much like a filing cabinet.
  • Using search functions.  I downloaded the Google Search tool; it’s fast and very efficient.
  • Using a backup system regularly.  This means organizing all data into one place on the hard drive so that setting up Handy Backup is easy.  The storage of data has been evolving – from a series of CDs, to DVDs to an external hard drive.  The evolution was determined by the amount of data and the time available to oversee the exercise.  I suspect the next stage will be backup in the cloud.
  • Making full use of my 3-in-1 printer/copier/scanner.  Most scanners today will save documents as a pdf file (a file format that saves the document as a picture and makes it unamendable)

These measures in place, the final decision was what to do with storage of all the financial documentation supporting tax returns.  To keep seven years worth of stuff takes up a lot of space that I don’t have.  I reasoned that since CRA (Canada Revenue Agency)is promoting electronic tax return  filing, they must be OK with electronic supporting documents.

I found some software that would organize it all – Organize My Electronic Filing Cabinet For DummiesOrganization for DummiesOrganization for Dummies There are two versions – Personal ($19.99) and Professional ($79.99).  After reviewing each I opted for the Personal version and dowloaded it from the site.  A PDF converter comes with it.

This means that all those picky pieces of paper (restaurant receipts, bank statements, etc.) can be quickly scanned and filed  automatically and then shredded.

It’s Tax Time!

Recently, the question of whether CRA would accept electronic supporting documents came up with some colleagues.  So I went on the hunt, with the able assistance of my accountant. We found extensive information on the CRA website called Keeping Records,  under “Methods of Keeping Records“.  It appears that electronic is OK, provided it is accessible and readable.

In the future, small business owners may find they can hand over the proverbial shoebox full of papers to their bookkeepers and receive a tidy disk containing copies of their stuff to accompany their financial statements.

Do you keep records like this?

Receipts