I am much more proficient preparing rich people tax returns than poor people returns. I am comfortable with pension plans, vacation homes, and excess mortgage interest. I am not so good at determining who gets the dependency exemption when your wife is your sister. While preparing a Kentucky tax return, I learned that Kentucky gives you a tax credit for removing the wheels from your mobile home. In the 1990's Arkansas had a tax return question that asked how many retarded children you were claiming. They have since PC'd that question.
If I file two returns with the earned income credit this year, it will be a record. Low income people get into the strangest no man's land tax situations. Often, poor divorced couples rush to file before their ex-spouses to get dependency exemptions for children. They know that the first one to the IRS gets the deduction unless you have the money to fight, which of course they don't. I'm really not good dealing with these situations. Give me a good old fashioned alimony dispute where the people can afford professional advice. Read that as paying yours truly.
I am now officially paperless for my bill paying at home. The big advantage of going paperless is that I don't have to spend an hour each month filing paid bills. I can drag them to a folder and be done. To be truthful, I haven't actually been spending an hour each month filing the bills - at least not if you use a standard definition of "filing." As Laura can tell you, my definition of filing bills is to put them in a big overflowing stack, drink a beer, and promise to put them in folders someday. At the office, I'm an organization freak. At home, I'm just a freak.
There are five things you need to set up a paperless bill paying system for your home or small office for that matter. First, you need a decent scanner, preferably one that duplexes. An automatic document feeder is a must. I bought an HP Officejet Pro 8600. These go for about $200 at Best Buy. I got mine for less than $100 using all my coupons. It is an all-in-one device. So I only have one device using space on the desk. I have been spoiled at the office, where we have production scanners that scan at copier speed, thirty pages per minute or more. Waiting for a home oriented device to scan is frustrating, but I didn't want to spend $1,000 on a production scanner.
The second thing you need is a backup plan for your data. For now, I am using a thumb drive and copying my entire filing system to it after each scanning session. I am considering paying for an automated system, like Carbonite, that will effortlessly back up my data to the cloud every night. The thumb drive takes less than a minute. I will definitely move to the automated system when the thumb drive starts cutting into my drinking time. I am not a patient dude.
The third thing you need is a folder structure on your computer. At the top level of my scheme, I have a folder simply called "Bills". This allows me to backup all of my data by just copying one folder to he thumb drive. Under the "Bills" folder, I have a number of subfolders.
The first subfolder is called "Unpaid". This is where I scan bills that have come in the mail. For bills I receive via e-mail, I just save them here. This subfolder is my default scan folder for my scanner. I am not letting vendors deliver paperless bills to my bank's electronic bill paying system. I use their system to pay bills, but if I decide to switch banks, I don't want to have to contact each of my vendors to change my delivery method.
The second subfolder is called "Paid." Under this folder I have a subfolder for each vendor. For instance, I have an "AT&T" folder for cell phone service and a "Washington Gas" folder for my natural gas bill.
On the same folder level as the "Unpaid" and "Paid" folders, I have some other folders. I have a folder for pay stubs. Why do I keep those? If you have refinanced your mortgage lately, you know why. The mortgage underwriter will likely ask for at least the last month's pay stubs. I also have a folder called "Tax 2013." I am accumulating any bills that may be useful for this year's tax returns.
The third item you need for paperless bill paying is a second monitor. You must be able to see the bill you are paying on one screen and actually enter the payment on the second. Maybe this isn't a necessity, but the second monitor removes the pain in the ass factor from constantly flipping windows on and off the screen, while trying to remember the amount you are supposed to pay, I have convinced myself. A second monitor is a necessity.
The final thing you need for a paperless bill paying system is a workflow plan. Here's mine. At least once per week, I scan all of the bills that have come in to the "Unpaid" folder. I use the following naming convention. The first six digits of the filename is the due date in yymmdd format. This easily allows me to sort bills by due date. The remainder of the file name is an abbreviation for the vendor. For credit cards I will end the file name with the last four digits of the credit card number. For instance, my credit card bill due 03/05/13 might be named something like "130305 BOA 9962."
I pay bills twice a month, just before the 1st and the 15th of the month. I pay the bills by opening my "Unpaid" folder, double clicking on each bill in succession and paying them using the electronic bill paying function from my bank. After the bills are paid, I drag each bill into the vendor's subfolder under the "Paid" folder. Then I copy the entire folder structure to the thumb drive. The last step is to pour a cold, delicious beer. It's the most important step. It's my reward for a job well done.
Today's nominee for stupidest S.O.B. on the planet is Eugene Meyerson, editorial writer for the Washington Post. In the Wednesday edition, he suggests that the federal government not only set the minimum wage, but set wage levels for all businesses. I'm wondering if his name is really a pen name for Vladimir Putin. Only a real moron, or a communist, could fail to understand the effect of letting government set wages.
Does anybody remember last century's runner up award winner for worst president of the century, Richard Nixon? He finished second to Jimmie "let them take hostages" Carter. In 1975, when he took a break from burglary, Nixon put wage and price controls in place. The end result was stagflation, recession plus inflation. When you control prices, bad and unexpected things happen. If the government sets wages, we are guaranteed one outcome, fewer jobs.
If a job doesn't create enough profit beyond wage costs, the job won't exist. No, it isn't enough for a job to just cover the wage costs. Businesses don't exist to break even. Who defines enough profit? Business owners, not Mr. Meyerson or the federal government. Control wages, and businesses won't hire new workers, and they will terminate unprofitable ones.
Thanks for reading! For real tax and accounting advice, visit the S&K main web site at www.skcpas.com. Also please like the HowToScrewUpYourSmallBusiness Facebook page. Until next time, let's do it to them before they do it to us.
