1040 Document Management Step-by-Step

As a product manager, I get to sit down with dozens of firms each year to discuss 1040 document management.  I like to speak to users from various roles within the firm – from partners to admin staff to professional staff. There are obviously a number of similarities between firms. However, I’ve found two things that are true in most firms that I’d like to discuss today.

  • Most firms follow the same basic process for processing 1040 returns.  Some firms may combine some of these steps, but by and large these are separate work steps.
  • I’ve also found that the most successful firms  are those who really use their software to its fullest potential.  In particular, those firms whose Document Management Systems are used throughout the firm and are used in every step of the 1040 Workflow Process.

Since most firms handle 1040 returns, let’s take a look at the basic 1040 Document Management process that most firms follow:

OBTAIN

The first step is to obtain source documents like W2s, 1099s, Receipts, etc.  Once your firm starts accumulating documents for a client– either physical or digital in form – you need somewhere to store them.  Any 1040 Document Management System should offer the ability to store digital documents, and most should provide the ability to scan paper documents and turn them into digital documents that can be stored in the Document Management System.

ORGANIZE

Next, someone in the firm is responsible for organizing the documents.  It’s important when adding files to the document management system, that all staff follow the same process.  This will ensure that files are properly indexed and filed in the appropriate client folder. It will also make locating files later much easier in the future.  Using a Document Management System like CCH Axcess Document can help ensure that firm-configurable rules such as file naming conventions and retention rules are followed.

PREPARE & REVIEW

While preparing the return, you’ll want quick access to the documents related to the return you are preparing.  Having immediate access to both the tax return and related source documents will be a huge time saver for both preparers and reviewers, allowing your firm to grow organically without necessarily growing your staff.

SIGN & FILE

After the return is prepared and has been reviewed, you’ll get a copy of the return from your 1040 document management system to send to your client. You can either physically print and mail or deliver electronically through a client portal. Once the client signs Form 8879, you can e-file the return.

DELIVER & STORE

After obtaining the client’s signed Form 8879, you’ll need to store the final signed document in your Document Management System. Retain the completed Form 8879 for 3 years  and the tax return itself for 7 years from the return due date, or IRS received date, whichever is later.  Automated file retention and destruction can ensure that files are kept only as long as required by law.

INVOICE & RECEIVE

Some firms keep a copy of the invoice they sent in the Document Management System for future reference.  Some firms also store copies of payments received in separate AR Business Units where only select AR personnel have access.

Learn more about 1040 document management trends by downloading our whitepaper, “Document Management Strategies: New and Upcoming Trends.”

AUTHOR

Damon Russel

All stories by: Damon Russel

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