This is probably the most dreaded time of year. Tax time. We all hate doing it because you never really know if you are doing it right or not. I still remember the first time I filed once I had a business and it took ALL day to come up with everything I needed because I was ill equipped. I had no sense of organization and a filing system that it took all day just do to Schedule C. It was awful.
So I wanted to make some tips for you to help you prepare for this time of year.
Tip 1: If it can be listed as a deduction, SAVE YOUR RECEIPTS! (i.e. work uniforms, taking clients out to eat, buying office supplies).
I can’t stress this one enough. If you don’t want a ton of papers lying around, that is fine. I scan them into my computer, or there are plenty of apps you can use to save your receipts. It doesn’t really matter how you save them as long as you do. You can mark these on your taxes and it will help you!
Tip 2: WRITE IT ALL OUT! – spreadsheets
This will save you a TON of time if you write it out while you are thinking about it. I keep a spreadsheet that has every single type of deduction on it, when I take it out, which account/card I take it out on, and where it went (company, etc.). I have included a template of that exact same one for you here!
Tip 3: Keep all your paper and virtual documents in one place
I have a very specific taxes folder saved on my computer. It has each year in separate folders and it has any receipts that I have used by month, the actual tax forms, and anything else I think I may need. This way, I can always find it if need be. Now when it comes to spreadsheets, I keep these in the same place in a Google Drive. It’s under an accounting folder and it has separate folders for each year.
It is very important to keep it this way so that everything is easier to find.
Tip 4: Create templates to use over and over again each year
The template that I showed you above is exactly what I use. I make copies of this every year so that I can use it over and over again. If I make a change to my current one, I will also change it in my template version. This makes it extremely helpful so I don’t have to keep making a new one each year. I have one each year so that way it becomes very easy during tax time.
Tip 5: If you are unsure of what qualifies as a deduction, when you are doing your taxes for this year, write them out so you can start tracking them for next year
I learned this the hard way. I was not tracking over half of the possible deductions the first year that I was in business. So, I looked up all of the possible deductions and wrote them out on a spreadsheet with each definition so I could easily reference it and know what each category specifically meant. I even color coded it so I would know if my business may actually use this or not.
You can see that in the template I made you.
Tip 6: Use a service
I am one of those people that prefer e-filing. I love using a service especially because I can have the previous year’s information already saved and it’s pretty easy to go through. Plus, they check if there is anything that looks off or has a higher rate of being audited.
Since this is one of the times of year that creates the most headaches for people, help yourself from one by taking some of these steps. Already feel like you have dropped the ball? Don’t quit! Start them now! It will help you create a habit.