First Person: How Keeping Organized Can Save Money

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Time is money. Those three simple words are clear and succinct and yet many people appear to have difficulty understanding that fact. In my practice, I charge many of my clients an hourly rate and I am often amazed at how some clients waste that time by coming to meetings totally disorganized. When I meet with clients during an engagement, I usually give them a checklist of what documentation and paperwork is required in order to complete the given task. The purpose is simple - I describe the documents that I need and the job can be completed in a reasonable amount of time.

When I am preparing a client's tax return, I require certain information and I send each client a tax organizer which is based on the previous year's tax return. This form, which can be anywhere from three to ten pages for most clients, lists the documents that were used last year and are needed this year. If a client received an interest statement, form 1099-INT from an organization the year before and doesn't present it this year, a notation is made and someone will contact the clients to discuss any missing documents. Furthermore, the instructions are clear that the client should send a copy of any correspondence from the Internal Revenue Service, or their state's authority, as well as any form relating to income. I request that clients list certain expenses and confirm that they have appropriate receipts. I will also spend maybe 30 minutes to discuss any tax questions or issues that the client may have.

There are some clients however, who are anti-organization and believe that it is acceptable to simply put 100 sheets of paper into an envelope and drop them off at my office. This means that I have to go through each sheet of paper and decide its relevance. I may have to sort out receipts and construct spreadsheets to run totals. After I have done that work, I then have to enter the information into the organizer so that it is in usable form for data entry. Those additional steps cost money and add substantially to the bill. These type of clients could save anywhere from $200 upwards simply by being better organized and entering the data in the organizer.

However, the absolute worst case of disorganization that I have ever seen was a person brought in paperwork that spanned four years. The person was the conservator of another person, and had to file an accounting to the court, showing how he or she was managing the conserved person's income and assets. The information was contained in two thick loose leaf books. There was neither rhyme nor reason in the order of the paperwork. I had to spend a number of hours to simply sort it by year and then by category. Three quarters of the papers were unnecessary. This lack of organization added over $1,500 to the job. This person believed that any and all scraps of paper are relevant when nothing could be further from the truth.

It is to your advantage to keep your financial records organized and present only relevant information. Being organized will likely lead to less stress for you and I know that in my practice, clients who present their information to me in an organized manner will never have to worry about receiving a charge for additional time.


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