If you’re anything like me, the last time you thought about how much you needed to pay in taxes for 2012 was in April of 2012. You had a rough idea of how much you’d earn, a rough idea of how much you’d spend and write off, and the reality of your expenses and pay stubs was stashed in a shoe box until April 2013. "There must be a better way," you tell yourself, year after year, only to find yourself wondering if squirrels are eating your key and missing receipts and invoices, year after year.
But this post is catching you at an opportune time. You’ve just paid the last of your quarterly estimates for 2012 (or missed them). You have roughly three months to pay your remaining state and federal dues on the year. And we’re only a handful of weeks into 2013, the year that you will finally get around to going paperless and keeping all your expenses tabulated, backed up, and available at any time. There's even a single-serving site to encourage and help you get going
Here’s the path to less document pain in 2013, for your taxes, and for your life in general.
You’re going to keep all your receipts, tax forms, and documents in one place in 2013, and it’s going to be online. You must keep the actual paper somewhere, but for most people, something as simple as a shoebox can work for that. You can also keep backup copies on a local hard drive, which would be very smart. But you must choose from one bucket or another, so that you know where everything.
We’ve compared the major online note-and-file services before. The scanner I’m going to recommend can send files to Google Drive, Evernote, Dropbox, and other services, and all of them offer ample free space for your items. What works best is up to you and your devices.
Make folders (or tags, in apps like Evernote) inside that bucket for your key tax categories: meals and coffee, business expenses, utilities and other bills, research, and so on. When you scan or snap your paper, be sure to put it in the right folder. Technology can do many things, but it can’t quite remove the need to put things in their right place (yet).
If you paid for everything in your life with credit cards, even taxis and cheap coffee, and if every payment you received was direct deposit, and if every financial firm was totally cool with your request for paperless everything, then you’re in great shape. A few email searches and, boom, you’re off to the accountant. Stop reading now and enjoy your perfect life.
Still with us? Okay, you need two things to transform the paper that’s constantly trying to get lost and in the way: an easy, mostly portable scanner-thing, and a very portable scanner-thing.
Fujitsu’s ScanSnap brand has been at this paperless thing for a while. Their scanners are, relatively, small and lightweight. More than that, ScanSnap scans paper, receipts, and other dead trees directly to your smartphone, and their app can fling those things straight out to Dropbox, Google Drive, Evernote, or another service you prefer for long-term storage. Which is exactly the point: it is much, much harder to delete your entire Google account than to lose a receipt. Other scanners will work, of course, but ScanSnap is an ideal solution that comes highly recommended.
What about when you’re away from home, and you could not or would not bring your ScanSnap with you? That’s when your phone subs in. On Android or iPhone, you can use the official app for your chosen "bucket" to capture a simple photo of what you’re capturing, if all you need is the image and not the text. For help getting a great image, and for converting to PDF format, you can try JotNot for iPhone or Handy Scanner. If you’d like to capture a receipt or document and have the text be searchable, again, try the official apps for Google Drive or Evernote, or an OCR (optical character recognition) app like TextGrabber.
If your paper involve month-to-month invoices and expenses, not just year-end taxes, your stash-it-all approach can still work for you. You could do something as simple as create a folder or tag in your "bucket" named "Expenses" or "Invoices," or you could use one of a few tools meant to smooth out the process:
Shoeboxed, which has been around since 2007 and which adds the convenience of mailing batches of receipts to them for imaging.
ExpenseMagic, creating monthly expense reports from your receipt photos, tabulated by "bookkeepers."
Expensify, that can also provide automatic GPS-based mileage reports and integrate with QuickBooks.
FreshBooks, aimed more at invoicing, but recently adding .
The chains of a habit are hard to form, especially in the early days. But if you know you’re going to mess up, you can leave yourself some leeway by setting a calendar appointment, every week or month, to review the paper that came in and scan or photo-snap all the stuff you didn’t catch right away. It’s like the weekly review that’s built into the Getting Things Done methodology, but just for your stack-and-forget paper habits you’re trying to break. Soon enough, after a few weeks of "Nothing to scan this Friday afternoon," you’re not just ignoring paper lightly—you are flinging it into the cloud and out of mind with great force.