Tax Season 2010

Top 7 Document Management Solutions 2009

1-2-3 Workflow: Scan, Sort, Stream

By George Lawton

Innovations in document management software promise to reduce paperwork and increase workflow. Programs have emerged that have the ability to automatically sort documents and to flow data into tax forms. Many of these services also are offered online as cloud services.

Jack Miller, EA, owner of Miller Tax Service, says that document management software has reduced the time he spends finding and moving paper around: "When a client calls, I can pick out the document they need and mail it to them in a matter of minutes. Before, I would have to go to the drawer, pull out the file, pull the staple out, make copies and fax it to them. That would take 15 minutes."

Ed Jennings, CEO of Copanion, says that IRS regulation 7216 and modernized e-file requirements are accelerating the demand for affordable tax document flow. A recent study by Copanion found that the practice of scanning tax documents grew from 45% of the tax returns in 2007 to almost 75% in 2008.

The new e-file requirements expand the amount of data that must be attached to an electronic filing. "There is a movement of more and more things being scanned and attached to the filing," Jennings says. "The modernized e-file is trying to drive data to be imported into the form itself."

Automatic Organization
After a document has been scanned, it has to be saved to a client's file. In the past, a human would have to classify the documents so the program could file them correctly. Applications such as Doc-It, CCH Scan&Fill and Copanion GruntWorx, however, identify and classify documents automatically. These programs can label each document as a W-2, K-1 or other type of form, and organize them in an order chosen by the preparer.

Filling the Forms
The next step is transferring the data from the documents into a tax preparation application. CCH Scan&Fill, GruntWorx Pro and CCH ProSystem fx Scan have the ability to transfer tax data into the tax application using Optical Character Recognition.

One challenge accuracy. If a number on a document is smudged, the software has difficulty translating it into text. When such an issue arises, the software highlights the number in the form and on the document so the CPA knows to check it.

Program-Based Integration
Many document management programs integrate with financial applications. For example, Personable SourceLink plugs into QuickBooks so documents can be attached to every transaction and every client stored in a QuickBooks file.

Dennis Lindsley, owner of PC Impact, a QuickBooks training company, realizes the benefits of being able to attach documents to transactions in QuickBooks: "In order to find a receipt, I no longer have to look at folders or files. I just go to the transaction, and there it is."

CPAs also can store other documents, such as tax returns and employee forms, with the client's file in QuickBooks. "With QuickBooks, the accountant can simply pull up the client, click on a few buttons and find all the data associated with the client," Lindsley says.

Roger Mongeon, vice president of sales and marketing at Doc-It says: "The Doc-It Suite of Tools doesn't need an Adobe license. The Adobe editor recognizes tick marks. Doc-It is integrated into several tax software systems. The tax preparer creates forms that are detectable and routes the documents to the right folders. Quickbooks files are large; emailing them is impractical beyond 10 megabytes. With Doc-It, users create a library of pdfs that can be retrieved in a non-proprietary format. Many document management products require proprietary vendor software. This locks the user into that product, whereas Adobe pdfs can be opened by anyone."

Other applications, such as Office Tools Pro, work with a suite of tools for managing all of a firm's client engagements, projects and billing. Rick Oelerich, owner of Oelerich & Associates says: "Office Tools Pro links stuff together so completely that it makes prep for the meeting easy without having paper on my desk. It really integrates the entire document process throughout the office."

Working in the Cloud
Document management technology can require significant storage space and a reliable computer and backup system. To combat these challenges, many vendors offer document management as a service from the Internet cloud.

At a basic level, this might involve an online backup system in case of a computer malfunction or natural disaster. With other tools, the user interacts with an application that runs from the Internet. Cloud-based applications, such as ProSystem fx Document, use a smart client that interacts with the application outside of a traditional Web browser. This approach provides the speed of a traditional application with the management ease of a Web-based application.

The concern with storing client data online is security. Consequently, many vendors have acquired SAS 70 certification, a new standard designated by the U.S. Securities and Exchange Commission. SAS 70 physically audits facilities to ensure that systems are not vulnerable to data theft.

Document management has significant benefits. Scanning and storing documents electronically is a basic way to improve workflow. More advanced tools can increase efficiency by automatically organizing documents, scanning them into tax software and working in the cloud.