in: Accounting
by: Katie Hellmuth Martin
If you open your mail to pay your bills or look at bank statements, you will see several incentives to get you to go paperless. The banks want to save money from printing all of those sheets of paper and paying postage to send the mail to you each month. However, is going paperless in your best interest?
Banks Close. Your Bank Statements Disappear.
It's true! Even in these modern times, a bank can close. And they don't have to keep your bank statements anymore. A recent reminder is when HSBC closed their small business banking with the flip of a switch. Employers couldn't access cash to pay bills or employees, and at tax time, anyone who elected for paperless bank statements had to rely on their own selves to have downloaded the bank statements onto their computers or printed into paper files. If you keep your own books, you may not go by the bank statements to enter your transactions. But your accountant will, and you may need to send your accountant statements at year's end so that he/she can make sure everything is reconciled.
Your Good Intentions of Downloading Statements
Your accountant told you to save your statements each year into your computer, and you did it the first year they told you that. But did you for the next year? Or did it become something you'd get to later. Like 2 years later. Yeah, it's an easy chore to put off. Really easy to execute, but most likely never happened. Plus, you most likely have more than one account. A bank account, maybe a savings account, a credit card, and on and on. If you are paperless on all of those, your computer time just increased.
Your Hard Drive Crashed, Melted, Disappeared.
Right, so you downloaded all of your statements like a good business owner, but you saved them on your computer. Which just fried. And you didn't have a backup. Or you did have a backup, but that just kicked the bucket. Oh, and all of your files are saved "to the cloud", but you don't really know what "the cloud" is, nor do you have the password to it, nor does "the cloud" come with a customer service number. (can you tell this is a pet peeve of mine...this "cloud"?)
Bank Statements Only Kept Online for 7 Years
If you elect to go paperless, you don't have infinate years to access those bank statements. You have about seven years, or whatever the policy is of that bank. So get into the habit of saving these statements to your computer now.
The Best Solution: Download + File Paper Statements
The best of both worlds is to download bank statements from your bank, and save them to your computer, and back up those files to another hard drive. If you receive paper statements, you can file those easy-peasy every month into your paper filing system. Then you have them forever unless you lose the filing box in a move or from a natural disaster like a flood or fire. Having the electronic PDF version of a bank statement makes it very easy to get financial documents to your accountant or anyone requesting it of you. Once you're organized electronically, your work-load just decreased by several hours. And having the paper filed to back it up just feels more secure.
