The Hidden Dangers of Going to a Paperless Accounting System

As technology progresses and innovates, more people are turning toward paperless systems to organize their lives. In both the office and the home, we are beginning to see an emergence of online and cloud-based organizational tools for everything from scheduling to finance. Though this type of software can be of great help to those looking to organize their homes, small businesses should exercise caution when making this type of transition, especially if it includes accounting actions, such as payroll and finance. Going paperless is an excellent way to modernize and streamline your existing accounting processes, but it’s not with risk; as with most transitions, there are right and wrong ways to go about doing it.

Small business transitions require, at the simplest level, support from all or most members of the team. Without nearly universal agreement, the transition itself can be messy, bumpy, and time-consuming. You’ll want to show how going paperless can benefit both internal organization and customer services. This, however, should not be difficult – countless businesses have already used this as a strategy to modernize, and financial publications continue to cite paperless accounting as a great way to clean up your company.


Paperless Systems must be Audited

Once you complete the transition, you’ll want to keep a close eye on paperless finances. Recently, a payroll manager in Tallahassee managed to embezzle more than $200,000 using company credit cards. The individual began to embezzle only after the company went paperless, relying on the lack of paper trail to rationalize her actions. Though the story itself is quite a wild ride, this is the risk you take when switching to electronic or cloud-based accounting. If data needs to be deleted, it can be done with ease.

Because paperless accounting, by definition, leaves no paper trail, some business may want to consider investing in W-2 and 1099 accounting software that combines paperless e-filing with printer-friendly form mailing options. This will allow users to create paper documents for mailing out employee copies of essential forms, like the W-2, as well as archival files your company may want to create and store. While some might say leaving the option for a paper trail negates the purpose of going paperless, we argue that this service simply provides back-up in case you need to cross-reference bills, provide clients with letters, or store important employee files in a secure space. Think of it as the paper ballot generated alongside your electronic ballot at the voting booth.

So, before you go paperless, think about how you want to create a back-up record. For most, this means including some sort of paper trail for the important documents while bringing the rest of your accounting into the electronic process.