Earlier this week, I linked to the Paperless 2013 website, a vendor-sponsored initiative that encourages businesses to cut paper, ostensibly for environmental reasons. The products featured by the sponsor vendors – Google Drive, HelloFax, Manilla, HelloSign, Expensify, Xero and Fujitsu ScanSnap – can certainly assist with this, although I run a completely paperless office using only one of those (Google Drive), and that one only in a secondary role. The interesting part was a conversation that ensued with another small business owner, although she was primarily interested in going paperless with personal documents (which I have also done), which made me realize that most small businesses are a bit clueless about how to go about this in a secure and legal fashion. I’ve been involved in large-scale document scanning projects since the 1980s, and I’ve gathered a lot of ideas about how to do this on a scale suitable for organizations of any size, so I thought that I’d lay out a plan suitable for small businesses.
Keep in mind that although I run a single person business, it’s incorporated, so I have the same paperwork requirements as any other private company: invoicing, payroll, government filings, income tax and all. I also do some amount of document collaboration with other small businesses, as well as for some non-profits with which I’m involved.
Here’s how I keep paperless:
- If I receive a document in electronic form, I leave it in electronic form unless I absolutely need to print it.
- If I generate a document, I leave it in electronic form unless I need to physically sign it (such as a contract) or take it to a client meeting (since many of my clients have not embraced the paperless way). This is not just Microsoft Office documents, but any document including things such as invoices, which I generate from my accounting software (QuickBooks) directly as a PDF and email to clients: I keep a copy of the PDF invoice, but it is never in paper form in my office. Services such as Freshbooks pride themselves on offering electronic invoicing, but you don’t need to switch if you’re happy with what you have, just install a good PDF generator and send it via email.
- If something is in paper form but I can get the electronic version instead, I do. Although my bank doesn’t provide electronic bank statements for commercial accounts, many other banks and service providers do. Most of my monthly expenses receipts, including travel and telecommunications, arrive in PDF, since most airlines, hotels and car rentals will email a receipt to you if you ask. My most common question at a client site when they hand me a huge printed document or presentation is “can I get that in electronic form”?”
- As a last resort, if I receive something in paper form (or have to print it in order to sign it), I scan it and shred the paper as soon as possible. This is the crux of most document imaging projects, but in reality is a fairly minor part these days if you do most of your communication electronically and can keep paper out of the mix altogether. Yes, it’s legal (more on that below). Since my volume is very low, I use an inexpensive Epson scanner that I picked up at Costco, and the software that came with it. That’s fine for a few pages a day, but anything more than 10 pages at a time gets tedious because it doesn’t have a sheet feeder. I would highly recommend a sheet feeder if you have a backlog of paper to convert, or if you regularly receive large paper documents. For smaller receipts when I’m travelling, I snap a photo with my iPhone, back it up to the cloud, then destroy the paper document.
- I use automated backup to replicate everything offsite. This eliminates the risk of losing documents, and allows me to access documents from my netbook when I’m travelling.
- I use online backup/sync services for shared content management when I collaborate on a project with other small firms and independents. Even if I were working with people in the same office, I would use the same methods since there’s no need to own your own servers.
- I manually maintain retention policies on the electronic documents, and delete them appropriately. In Canada, that means I need to keep all corporate and tax-related documents for six years past the end of the fiscal year: I just deleted my 2006 files and shredded the paper files, since that was the last year that I kept any paper records. For any files with a retention policy, I keep them in dated folders so that I can quickly purge them without having to search through files; this means a bit of electronic reorganization at the year end, but it takes only a few minutes.
The result: I have no paper files in my office, except for a small pile in my in-tray waiting to be scanned. No filing cabinets, no boxes of documents in storage. As an added bonus, I have offsite backup, which most people with paper files don’t.
Quelling the nay-sayers:
- “I don’t like to read on a screen”. Get a bigger/better screen, or dual monitors, and a tablet for taking it with you. Cheaper in the long run.
- “It’s not secure”. Back everything up offsite, not just locally, in case of a physical disaster (fire/flood/theft). I use Jungle Disk (a division of RackSpace), which encrypts my data on the desktop, then uploads it to an encrypted Amazon S3 bucket. I hold the key, not them, so they can’t decrypt my data. My backup runs automatically, so I don’t need to do anything to make this happen.
- “It’s too hard to create electronic documents”. Get a good PDF printer/document assembly application. I use CutePDF Pro, which allows me not only to generate PDFs from any application that can print, but also to assemble multiple PDFs into a single document, rearrange pages and other functions. This is useful when I need to append a timesheet to an invoice before sending to a client, or to concatenate all of my expense receipts to attach to a monthly expense report.
- “I can find things easier in my filing system”. Easier than searching through full-text documents? I don’t think so, unless you have a really trivial number of files. Learn how to use search capabilities of your desktop environment (built into Windows, for example), install a third-party search utility, or (if your company is large enough) use a shared content management system.
- “I need to keep these paper documents for legal/regulatory reasons”. Probably not. Most government taxation bodies have long accepted digital copies (scans of paper, or original digital documentation such as an invoice received as a PDF) in place of paper – what they refer to as “electronic record keeping”. You can see the Canada Revenue Agency’s take on this at http://www.cra-arc.gc.ca/tx/bsnss/tpcs/kprc/menu-eng.html, and similar policies exist for the IRS and other agencies. The Canada Labour Code has similar requirements for human resources records. You may need to research for your type of documents in your jurisdiction, but electronic record-keeping is most likely allowed.
If you’re starting from ground zero of a paper explosion, this might seem a bit daunting. Keep in mind that you can do this on a day-forward basis, since many of your old paper files can be shredded as they pass their 6th birthday: just go paperless starting today (or from the beginning of your fiscal year) and let the old paper cycle out over time. If you really love it and want to get ambitious, you can start doing some back scanning, but it may not be worth it. When I started in 2007, I was already keeping everything electronically that originated that way, but added in scanning of expense receipts (my biggest single paper volume) and government documents, which was not a big change. I still didn’t start scanning contracts for another few years, since they’re big and I don’t have a sheet feeder, but eventually went back and scanned all of the old ones just to clean out the last of the paper files.
A lot of these ideas, of course, are not limited to small business, but form the core of any ECM initiative. Things get more complex when you add in automated business processes to move those documents around between people, but the basic concepts, motivations and nay-saying are the same.

(Cross-posted @ Column 2)
Thanks for the great article! I have been wanting to go paperless for quite some time but didn’t know where to start in terms of accounts until I decided to save everything on my computer using Office. I don’t know why you use QuickBooks though, I switched to Xero as it’s a lot easier to use and a lot cleaner for us older folk. I might be a bit of a newbie when it comes to backing up files, but do you mind explaining how you back up files to the cloud?
Hi Donald, thanks for your comment. I was unaware of Xero, I might check it out although I have found a lot of the online financial packages to be lacking compared to Quicken.
Backing up to the cloud is easy. Click on http://db.tt/U9rcKOk and sign up for a free account with Dropbox (this is my affiliate link; using it will give both of us an extra 500MB of free storage space). This gives you 2GB for free (or 2.5GB if you use the link above). Then, click on your name in the top right of the Dropbox screen to drop down the menu, and select “Install” to download and install an app that runs on your desktop. During installation, it will create a folder called “My Dropbox” — I think that this is usually in your My Documents folder on Windows, although you have the option to put it anywhere during installation. Once it is installed and running, any files that you put into that folder are automatically synchronized to Dropbox, hence in the cloud. You can install Dropbox on multiple computers and it will keep all of the files in the My Dropbox folder in sync between them: this is how I manage files between my desktop and netbook computers. There are iOS and Android apps for accessing your files on the go. As long as the Dropbox app is running on your computer, everything stays backed up without you having to do anything.
There are other free file synchronization tools — Google Drive, Box and SugarSync, just to name a few — but they all work pretty much the same way. SpiderOak uses encryption if you want the same functionality with greater security – I’ve been thinking about trying them out. I’m not concerned about someone hacking into my account (although that possible, but Dropbox allows me to use two-factor authentication so that’s unlikely) but more for protection against the government poking their nose into information. Not that I have anything to hide. 🙂
JungleDisk, which I mention above, also provides real-time file synchronization, but I use it only for daily backup: it’s another application that runs on my desktop and backs up everything that I want once per day, or on demand. It provides encryption and uses my Amazon S3 account for storage, so ends up costing me only about $3/month.
Lots of options. Unless you have highly confidential files, I would suggest starting with Dropbox or one of its competitors, since they are easiest to set up and are free to get started. With Dropbox, if you refer your friends, you can get free storage so you can probably build up a few extra GB without moving to a paid account if that’s all you need. If you have confidential files, try out SpiderOak.
You should try Bill.com. You upload your bills to store, route for approval and pay online. You can also do all of your invoicing and store contracts, estimates, etc. Not to mention it syncs with all popular accounting systems like QuickBooks, Xero, Intacct, Netsuite, etc. Take a look…
Henrique, I pay almost no bills from my company: most of my expenses are on my personal credit card (automated payments), and I just submit an expense report once a month then the company pays me back. I issue only a couple of invoices each month, since my clients tend to be large and few. I’m sure this would be a valuable solution if I had a lot of A/R and A/P, but that’s just not the nature of my business.
Everybody praises Dropbox to the skies but you have to keep in mind that it is one of the most expensive cloud services.Of course, you get some free space, but you will pay the full price to upgrade to the pro version. Instead, checkout Google Drive, Skydrive from Microsoft or Go Daddy. To keep my files safe, I use BoxCryptor and keep all my sensitive datas to my Boxcryptor folder
As we do more and more things, including business tasks with our smartphone, I would consider the following before choosing a cloud service: is this service listed among the services that are displayed on your phone when you click on Share? it is so convenient to send to the cloud in one second a credit card receipt that you have shot with your phone or an invoice or picture that you have received by email!
Philippe, I use the free version of Dropbox, which I have scaled up to 16GB through referrals to my friends: each referral gives both me and the new user an extra 500MB. For me, that’s plenty of space. I’m a bit annoyed that Google Drive doesn’t provide me with more than 5GB for free with my paid Google Apps account (the same as they give for a free Gmail account): if they did, I’d probably switch everything over there since I like it better for sharing.
And yes, in response to your second comment, having a direct “share to” or “open with” link on both my iPhone and my Android tablet are a must: these are timesavers when I receive, download or capture a document on one of those devices.
Henrique, last I checked Bill.com wouldn’t generate invoices with a Canadian address and the payment feature didn’t work in Canada either.
Great article – thanks for all the ideas. I think you will love Xero. It includes a smart phone app which, among other things, allows you to photograph a receipt, code it and add it to an expense claim. Then reimburse yourself at month-end and you’re done. Everything is stored in Xero. If you use Accounts Payable, you can also attach PDF files to transactions there.