Running a business of any size requires tenacity, creativity, and innovation to grow and flourish. With it also comes necessary paperwork, W2 documents, and tax documentation to make sure that the business is accurately tracking and accounting for its business, employees, and taxes. Keeping track of all this information, and properly storing it in a secure place, becomes a distinct challenge as your business grows in sales, people, and deductions. However, it doesn’t have to be stressful and confusing.
Storage and Retention of Client Tax Documents
You may have many questions when it comes to retaining and storing these records.
The following should answer some of your main ones:
Why keep records?
Keeping accurate and organized records for your business will help you in understanding how your company is growing and progressing. It can also unveil additional revenue streams. For tax purposes, it is important to have up-to-date records to help you with reporting income, identifying deductions, and being prepared in the event of an audit.
What kinds of records should be kept?
The records you keep, and how you organize them, will be largely dependent on your business and its needs. There is not a required accounting document management system you must use, but the IRS does require accurate accounting of two things: income and expenses.
How long should records be kept?
The length of time you keep a record is dictated by its function, and how long you need to keep that information recorded as part of business varies. Information must be kept as long as necessary to prove any income or deductions you list on tax forms. Accounting retention laws require that some records, such as W2 documents, be kept as a permanent part of your records.
What is burden of proof?
Burden of proof refers to the responsibility of validating anything listed on your tax forms, such as proof of income and deductions. As a business owner, this responsibility belongs to you.
Effective Ways to Enter W2 Data
Since W2 forms are records, you must keep them permanently on file for your business. It’s important to consider the most effective and efficient way to perform this type of document entry. Luckily, with the technology available today, forms do not need to be entered manually in order to be recorded and stored. They can be scanned. This also eliminates the burden of storing paper records, and minimizes the risk of losing them.
Scanning documents into a system is a great way to automate a practice that once required manual data entry. Additionally, scanning itself has evolved as well to make digital records not only storable but searchable as well. Using the most effective document entry process and systems for your business will help organize and automate record keeping as well as free up more time and funds for you to invest in other areas of your business.
Optical Character Recognition (OCR) technology takes information scanned and saves it as an image. This makes it a dynamic document that can be searched and edited. This is a great step in automation, but still leaves the work of transferring or extracting data from one format to another to be done manually.
Zonal OCR takes this a step further and revolutionizes data entry time—saving by not only making a scanned image readable, editable, and searchable but also keeping the form data intact. This has the potential to save the massive amount of man hours it would typically take to search and extract information from tax documents.
How to Manage W2 Documents
Using Zonal OCR is a great way to manage W2 forms and make document entry errors and redundancy obsolete. You just need to create a simple form listing out the fields of information you want to capture and store them to your system.
Then upon scanning a document such as a W2, a few key things will happen:
- A PDF of the physical document will be created and stored
- A zonal OCR program will extract information from the original, and populate it into the correct fields in your tax or data storage system.
- This process can be repeated quickly and efficiently by simply scanning the next document.
This means huge time-saving if your business requires manual data extraction from the same type of form. You can set up the fields needed once and have the extraction completed upon scanning the original.
eFileCabinet Zonal OCR Product
Accounting document management is necessary for your business, but it does not have to be repetitive, time-consuming, and expensive. Implementing a system that automates as many aspects of data entry as possible is a great way to open up time and funds to grow other parts of your business. You’ll also be staying in compliance with accounting retention laws.
Zonal OCR is now an available technology in eFileCabinet’s industry-leading document storage and management systems. Using this system helps businesses effectively manage all the tax records and forms that need to be kept on file, and it does it within a system that is digital and secure. With zonal OCR capabilities in your arsenal, scanning, extracting, and storing W2s is a seamless process that will help you focus on your business, not the paperwork.
Fill out the form on this page to see a demo of eFileCabinet products and how they can benefit your organization.