I have worked at an office that really spent a lot of time, money, and effort to go "paperless", and now I work at one that is a nice mix of paper and electronic. I think it all depends on the size of your firm and how you operate, but a good balance is sometimes better.

The problems I found at my old firm is that you have to have a fast scanner (which can be costly), and you have to have low cost employees that are willing to scan client documents all day. The later is actually more of the problem as it is not a fun job at all and I have had interns quit after the first day of scanning. Secondly, you have to have a good filing system. We had a simple Windows program built custom that combined the multiple scanned pdfs and organized them by name, SSN, and year. Lastly, you have to take advantage of having the documents in pdf, organize them, and do your proforma in pdf or else you would just be better of copying all the client documents and going all paper. That is where most fail to see any benefit because it is hard to train everyone on Acrobat's advanced features and set up all the processes that would be needed.

In my experience, if you are a small CPA firm, you are going to be much more profitable and efficient if you go with a balanced approach.

By the way, make sure you encrypt all pdfs emailed to clients. I make a rule of it as I think it is a big security risk if you do not - especially if you are sending them tax returns or payroll data. While it is inconvenient to call the client and give them a password, most really appreciate the security.

Paperless is wonderful, I've been for about 4 years. You really don't need to put out the money for e-file cabinet, etc, when you can work it thru windows.

What you MUST have is a good back-up, and the more off-site the better. I use drbackup.net and we did have to restore and it was painless.

Helen, EA in PA

We have File Cabinet CS and it is great not to have to hunt down a file. Good for reviewing if you have dual monitors. Be careful about attaching returns to an email, we are working on encryption. Some states are passing laws regarding privacy and security issues.

The thing to remember is that there is a difference between PAPER-LESS and PAPER-FREE. Paperless means less paper, not no paper. You're never going to be paper free. There are certain paper forms that you'll need or want to keep, just in case.

The first hurdle is monitors - you'll need AT LEAST two at each workstation. Everyone in my office has two except me, I have FOUR:

• one for the current year return
• one for the prior year return
• one for the current year tax documents
• one for my e-mail program, so I can make notes on what's missing to send to my client.

and I toggle that fourth monitor between e-mail and research.

You'll also need a good scanner, maybe more than one depending on who does the scanning. For mail-ins and drop-offs our receptionist does the scanning. For live appointments the preparer does the scanning while sitting with the client. I have to go through their paperwork anyway, so I just drop it in the scanner and scan it while I have my hands on it. No sense it handling it twice. Reception scans EVERYTHING the clients mail or drop off. Then the preparer can delete the trash when they do the return. This works for us, YMMV.

We use Fujitsu 4120Cs and 5120Cs - these are 50PPM, full duplex, color capable scanners. They cost about $900 each and came with a complete copy of Acrobat - well worth the price.

Backups (G*D I had that word) need to be bullet proof. We use a RAID server that runs Linux with Windows File emulation software. ONLY data is stored on the RAID - three separate hard drives that mirror each other. We also have a SECOND RAID server off site in my partner's basement. Daily around 1AM the machines are set to sync. We've tested them, they work.

The data is NOT backed up. Rather it is copied in a workable format. If my office burned down I could walk into my partner's basement and plug in my laptop and have access to the files with NO RESTORATION necessary. The RAID servers cost less than $500 each to buy and set up with software.

I'm too cheap to use packaged software for a file cabinet so I designed something simply, by year, then by client using Windows Explorer - its free with Windows.

We also password every file we send to clients. Its easier than trying to remember which files to password protect. I can e-mail the password but I use a separate e-mail and reception can give the password to anyone who calls and can be identified.

We also deliver tax returns on CD (we're thinking about moving to flash drives, but have not made that jump yet). We can get 250 years worth of data on a single CD. This lets the client keep virtually everything they used to prepare their tax returns essentially forever. They can dump the paperwork they have at home and can print as many copies of their tax returns, W-2s, 1099s or whatever they have on the CD.

Many of our clients also have us put copies of their insurance policies, wills, deeds, and other documents on the CDs. While these aren't the official copies, they do provide a good starting point when they need to locate something important. Good customer service in our book.

Going paperless will be one of the most daunting and frustrating tasks you'll ever engage in.

Being paperless will be one of the best things you'll ever do.

I am pretty much completely paperless now. My biggest fear is losing the electronic version of anything that would have been kept in paper form. To avoid that I've added a Windows Home Server to the network which does backups every 24 hours and have also sync'd the critical files with Amazon's S3 storage for offsite backup.