Whether you own a business, are an employee, do your own taxes, or have a CPA, this blog is for you!
The holidays have long since melted away, the forms are starting to roll in, and the taxman cometh soon! What I find with many of the clients I work with is that they are disorganized in general when it comes to their paperwork and when their tax stuff does start to show up… it just ends up in the flurry!
Don’t worry, I’m here to help.
Here’s a system you can use this year and stay consistent with throughout the year to ensure that next year is a breeze, stress-free… and maybe even FUN come tax time!
Disclaimer: This information is for educational purposes only and is not intended to substitute for obtaining accounting, tax, or financial advice from a professional accountant.
Designate Space for Taxes
Don’t mix in the tax paperwork with the daycare form you need to fill out for your kids! Don’t add your W-2’s to the stack of Christmas cards headed for the recycling bin, and don’t stash this over here and that over there. Set aside a specific space for all tax documents and only tax documents.
Here are some ideas of where to keep everything in one place:
- A two-pocket folder - this is what I use!
- A designated drawer
- A box or bin
- A filing cabinet
You can create a tax space anywhere, as long as everything stays in one place and you’re consistent with where you put everything you need. I also recommend labeling it and making it memorable in some way, so you don’t forget to use it throughout the year and add things that come up to it. If you own a business, or multiple businesses and need to separate your business and personal taxes, consider several folders or a way to separate your filing system. It can be difficult to do the “touch-it-once” rule when it comes to taxes (or any paper), so this is an area in which I make an exception when storing the paperwork I’ll need.
Do You Want a Receipt for That?
Yes, please! And while we’re on the topic, let’s talk receipts and filing! I have seen some beautiful accordion-style paper receipt-filing systems, Google-folder digital receipt systems, as well as shoeboxes filled to the brim full of receipts. You might use simple white envelopes and label them with a pen to organize yours. There is no right or wrong way to keep your receipts - the only way is the one that works for you and that you will be consistent with.
Organizing your receipts helps to make it easier for you and your tax preparer (if applicable) down the road so that you’re not searching last-minute through every pocket in your purse to find that business lunch write-off.
You can organize them by:
- Vendor or client name
- Expense type
- Anything else that works for you!
Remember that emails can often contain receipts as well, so my recommendation is to save these in one folder, or print them as you go through the year and save them with the rest of your receipts.
Bonus tip: If you run any business errands, have a meal with friends, travel, or purchase something tax-deductible, create a habit of filing your receipts as soon as you get home or once a week, at the least. You can do the same with your vehicle mileage.
Schedule in Time for Tax Organization
Don’t put it off until the last minute! Schedule time in your weeks and months to touch base with your finances and gather and file documents. Make sure you gather everything you need prior to meeting with your CPA or filing so that you’re not scrambling and feeling behind.
With just a few minutes spent on a regular basis, your tax documents will stay current, organized, and free from surprises come tax time.
Use the System That Works for You!
As I always say, everyone has their own method to their madness and it’s important to use the system that works for YOU.
It’s just important that you do it because organization can save you time and money when it comes to your taxes!
This is one of the many topics we cover in my monthly membership! Got questions about a method that might work for you? Want to troubleshoot your organizational issues in real-time? Join us! Declutter and Get Organized Resource Hub