The office of the future.

• Author: Valenti, Stephen P.

For the sole practitioner or small CPA office, "the office of the future will be paperless. The migration to a paperless office has been embraced by practices of all sizes. But, much like the initial transition to the n-house preparation of tax returns, many CPAs have avoided the process because they are apprehensive about potential problems and are so entrenched in their current mode of operation that they are hesitant to change.

Many questions come to mind when considering the transition. What is the best approach to evaluate alternatives? What exactly does "paperless" mean? Do all applications need to be converted at once, or should the conversion process be done in pieces? This article is intended to provide a road map for "paper-intensive" sole practitioners or small CPA offices on their journey toward a paperless office.

What Is "Paperless"?

Firms may claim that they have become paperless, but, on closer examination, it becomes clear that "paperless" is a relative term. The ultimate goal is that no paper documents are retained. Some paperless firms scan every document that comes into the office, use data storage programs to maintain virtual file rooms, electronically file all tax returns, and send their clients tax returns via PDF files rather than bound paper copies. Many firms use a hybrid of paperless and paper procedures and still consider themselves paperless. Most likely, compared with how those firms previously managed their information, they are using available technology to better advantage. The important thing to keep in mind is that any movement toward more efficiently managing the tax practice is a great improvement that will bear fruit over an extended period of time.

What About the Cost Benefit?

CPAs do a tremendous job of advising clients on how to cut costs and maximize existing resources using cost-benefit analysis. Likewise, the decision to go paperless should include a quantification of the potential advantages and disadvantages.

Advantages include:

1. A substantial reduction in necessary file space, allowing such space to be used for alternate needs.

2. The ability to access data from remote locations.

3. The ability to archive information more efficiently.

4. Reduction in the amount of time spent searching for misfiled and misplaced client information.

5. Eliminating certain manual tasks.

6. Streamlining engagement workflow.

   Disadvantages include:

1. Initial and ongoing costs to digitize paper documents, in both time and money.

2. The difficulty of establishing an effective system and set of controls.

3. If using a third-party vendor for the software tools and hardware, gaining assurance that the office will have control over the software source code and will have...