It’s hard to believe tax time is once again right around the corner! We’ve barely finished exchanging holiday gifts and making New Year’s resolutions—and already we’re met with the stressful scramble to identify business expenses or deductions, find and document tax receipts, and pray for a nice, sizeable refund. Tax time preparations seem to go more smoothly when an organized system is in place, yet this isn’t always the case. Some find themselves down to the wire, searching for receipts and gathering information up until the tax deadline, or even filing for an extension.
Today’s world is very much digital with a strong continuance of the good old paper trail. It’s easy enough to log into your online banking and pull any statements depicting earnings from interest. It’s quite a different story if your paper trail isn’t quite so organized and accessible. Count yourself lucky if you’ve diligently set aside all materials needed for taxes over the past 12 months. If not, there’s always next year. You’ll love not having to hunt in drawers, bags, boxes, and the bottom of your pocketbook or car console for those important business receipts.
Staying Organized at Income Tax Time
Since tax time often feels like a scramble, it’s easy to give in to the chaos and lose your groove. Try these tips to help you stay on top of your tax filing duties.
- Make a list of all the materials you have to gather for your taxes. Also note whether it’s on paper, available digitally, or both. Begin checking off that list as soon as you can!
- Put your documentation together in a sturdy folder labeled with the year and “TAXES.” You might also consider storing your tax forms and all supporting documentation together in a tax organizer so that everything is readily available should you need it.
- Pay close attention to your line items if you’re building an expense report. Make sure you’ve captured all your expenses without accidentally duplicating anything.
- Make notes of the purpose of the expense or the type of purchase it was. Thorough records add credible evidence to the validity of your business expenses, particularly if you should ever be audited.
- Use a daily planner to record work-related trips, including destinations, mileage, and other details. Save this planner after the New Year arrives and stash it alongside the rest of your tax docs.
- If you have an accountant do your taxes, check in well before April to discuss any questions you may have about this year’s filing. When filing business taxes, you will need to do some extra legwork to complete all necessary documentation. Work together with your accountant to ensure all requirements are met in time for the tax deadline.
- Get the wheels in motion as soon as you are able to dedicate even a small chunk of time to the task. Finding and recording tax receipt after tax receipt can be tedious, so it helps to break up the job.
- If you truly cannot complete your tax filing before the deadline, file an extension. Pay the required amounts and use the extra time to prepare any needed details.
How to Organize Receipts for Taxes
The best way to organize receipts for taxes may vary from one person to the next. Some folks like to simplify and take everything digitally if possible. Others may feel more comfortable with a paper trail and tangible receipts. Either way, a receipt storage system can make a tremendous difference in the ease of filing your taxes. Try these tips for better receipt storage all year long.
- Save all of your receipts. Keep business tax receipts together and store personal receipts in a different bag or container.
- Consider storing receipts in jumbo sized zipper-seal bags. Write the year on the bag along with a label indicating whether they are tax receipts.
- Try your best to use just your business credit card for most expenses. This helps you to keep better track of your tax-deductible spending. Feel free to write detailed notes on your receipts. This can be vitally important for tax record integrity, particularly in regards to the purpose of a business meal, who else joined you, and so forth.
- Keep a zipper-seal sandwich bag in your car’s console or in your purse for receipt storage. Immediately place receipts into this bag, and once per week, transfer the receipts into their intended storage receptacle.
- If you receive emails for online orders belonging to your business, add a “taxes” label to the message containing the order number. You should also consider printing these out and filing them in your tax receipt container.
- If you prefer a digital setup, consider scanning your receipts. You can then back up your computer’s tax files to the cloud for an added layer of storage safety.
- After tax time concludes and you’ve either paid Uncle Same or gotten some money back, be sure to save your entire tax packet. Plastic filing boxes can be a great choice for your tax materials.
- Once you’ve amassed a small collection of tax years, consider moving your tax storage system to the attic or to a private and secure personal storage unit for safe keeping.
If you take the time to optimize your recordkeeping now, your future tax time experience should flow even more smoothly. Good luck!