We all see the encouragement to "go paperless" and save everything as a digital file. I had bought into that as well, but no longer.

However, on March 8th of this year the IRS announced it was doing a full, random audit on my store, The Keeping Room (and it is still ongoing) and believe me when I tell you they want EVERYTHING on paper. If you saved it digitally, you WILL be printing it out! Bet I have made close to 1,000 copies to date for paperwork they require that I had saved digitally.

Every paycheck stub, every credit card receipt, every invoice matched to every sales ticket - gotta have it. All your 1040's are no good as a Turbo Tax file, you have to hand them printed copies, including all schedules. Same with 1120 Forms for Business. For those who have never undergone an IRS Small Business Audit, its both stressful and a huge time-eater, which is why you may have seen a slight drop- off in my forum posts since March. This audit has consumed a lot of time and it has taught me to start keeping better records and file everything where you can find it easily. With the IRS, it's the opposite of our justice system - you have to prove everything, the burden is on you as the business owner. If you can't prove it, your are bingo'ed.

Did you know the IRS doesn't do email? So when they are back at their offices and request a 50-page report, you can't send them a .pdf, it has to be printed out and go out on the Fax Machine or be mailed. Crazy stuff.

I have gone from a mediocre record-keeper to a strict one, everything from now and in the future will be kept, and all on paper. Word to the wise!