By Maria Scala
While, in the past, most people felt more comfortable keeping their important financial documents in a locked filing cabinet, desk drawer, or safety deposit box, technology is making it easier than ever to safely digitize your tax documents and financial records. Ensuring that your documents are secure should be a priority, but there are plenty of reasons you should want to move to a digital storage platform and many ways to do it safely.
Some of the biggest advantages of moving to a digital storage system for your tax documents and financial records include the ability to:
- Reduce the amount of paper you must go through, organize, and file away for future reference
- More easily and quickly access the documents you need
- Include a date stamp on documents so you have a record of when they were created and be able to access the most up-to-date versions
- Electronically track edits
- Monitor anyone who has been viewing your documents
- Password-protect and restrict private document
- Benefit from added protection from damage that might otherwise be caused by fire or water
With the help of a scanner, you can easily and safely digitize your paper tax documents and financial records. Shredding your scanned documents is a good idea, though you should consult with your tax advisor and attorney to make sure that you’re retaining any type of document that may need to be provided at a later date in paper format.
Once you’ve safely scanned your tax documents and financial records, you can store them in one of two ways by opting to utilize:
- A self-hosted system such as a dedicated hard drive or multiple thumb drives. To further ensure the security of these electronic documents, the self-hosted system should not reside on your home computer. If it crashes, is stolen, or gets hacked, it could cause your documents to be lost permanently or exposed. Because self-hosted files are not on the Internet, hackers aren’t able to get at the files unless they compromise a computer where they are being hosted.
- The Cloud. You can use your Cloud’s internet-based storage to house large volumes of information and to keep them for long periods of time. However, to safely digitize your tax documents and financial records using this method, you want to be sure that your provider is both reputable and encrypts everything you would put in The Cloud. The advantage of using this method is that you can access your files from anywhere with the help of a secure internet connection, though this is a riskier approach as there is currently no Cloud-based system that’s guaranteed to be 100% secure.
If you need help determining which of your tax documents and financial records would benefit from being safely digitized, consult with your Untracht Early advisor for more details.