Effective Storage and Management of Client 1099s
Maintaining proper storage and management of client tax documents are not only important, they’re vital. While this is true for all tax-related documents, it is particularly true for 1099 documents. Due to the sensitive nature of this information, these forms must be handled with care. Thus, proper document management can become challenging.
Storage and Retention of 1099s
As with any tax-related information, there are certain procedures and practices that must be adhered to. Containing a considerate amount of personal information, organizations must be vigilant in maintaining appropriate storage and retention of these sensitive documents.
1099 Retention Guidelines
Curious what accounting retention laws and regulations are in place that dictate the storage and retention of these documents? While there is no one single universal law, there are some general record retention guidelines that you should be aware of.
What You Need to Know
Often used to report incomes earned by independent contractors, freelancers, and small businesses, 1099s are not exactly a straightforward tax document. Due to the versatility of this document and the multitude of transactions that it can be used for, 1099s can hold a vast amount of data.
Managing this large quantity of data can be demanding to say the least. However, proper management of this data is vital. Clients depend on accurate and reliable tax information, not to mention improper management can lead to legal consequences.
1099 Data Management
Composed of 18 boxes of information to be filled out, 1099 tax forms contain a significant quantity of data, and as with any set of data, it must be managed effectively. Businesses have essentially two primary options when it comes to managing this data: to either select manual management or to opt for automated data management.
Manual Data Management
Manual management, although a common form of data entry, remains one of the most effective entry measures today. Ask any former data entry specialist, entering information manually is time-consuming. Once the only reliable way to enter 1099 and other tax-related information, manual data entry is time-consuming, redundant, and highly susceptible to error. After all, manually entering number after number can become mind numbing.
Chances are that—no matter how careful you are—manual data entry is still susceptible to human error. While many law firms and accounts still rely on data entry clerks, these positions are highly susceptible to turnover and thus pose a high risk.
Automated Data Management
Luckily, there is a solution to the drudgery of manual data entry. Thanks to advancing technology, fully comprehensive automated management systems are available. Long gone are the days of needing a full in-house team of data entry specialists, which allows you to significantly save in your employee costs.
As you likely know firsthand, in-house positions can be costly to maintain. With high turnover rates, low job satisfaction, and a high susceptibility to error, manual data entry can be extremely costly to any organization. However, automated data entry is not just cost-effective, it’s also faster. Entering manual data takes time; automated data entry can be completed nearly instantaneously.
Streamline Your Operations
Ready to streamline your operations? If you’re ready to make your accounting document management processes more efficient, you’ll want to become familiar with zonal OCR, otherwise known as optical character recognition. Not sure what zonal OCR is? Don’t worry; you’ve come to the right place.
How Zonal OCR Works
Zonal OCR eliminates the drudgery and mistakes of manual data entry. Instead of manually typing in data, with zonal OCR you can simply identify the fields of information that you wish to capture for any document you choose. Essentially, zonal OCR allows you to scan any document and extract the most important element: the data.
While there are other automation technologies around, zonal OCR is the next level of data entry automation. By not just allowing people to search documents but to extract the important data as well, zonal OCR makes data extraction a breeze.
Advantages of Zonal OCR
In addition to being a cost-effective way of effectively managing your 1099 and other tax-related documents, zonal OCR also offers a number of other notable advantages:
- Superior security: All human document entry is susceptible to error. Even when a cautious and organized approach is undertaken, there is still a possibility for error to occur. Often an entry-level job, data entry clerks cannot always provide 100% accuracy in their work, but zonal OCR can.
- Superior efficiency: Zonal OCR allows document scanning and data extraction to be one seamless process. Rather than typing each bit of information, zonal OCR automatically extracts the data seamlessly. Zonal OCR relies on data templates, flexible in their use and application, to easily distract and sort the important data you need.
- Superior speed: What may take a data entry clerk a half hour or hour to complete can be done in minutes with zonal OCR. eFileCabinet’s paperless document management system makes scanning and transcribing any document one incredibly simple process. There’s no need for multiple management systems when you have eFileCabinet, which increases the speed of your organization’s processes significantly.
Want to see how zonal OCR works in action? Simply contact us and our team will be happy to demonstrate how this technology can work for you. Fill out the form on this page to request a 15-minute demo.