It’s that time of year. Tax season. Instead of gifts, parties, horns and confetti tax season brings up images of headaches, the IRS and long hours of crunching numbers.
While tax preparation is never painless there are things you can do to make it go more smoothly and you’ll want to start right away. While it’s true that you can file for an extension your tax obligation never goes away…the sooner you get it taken care of the sooner you can move on to other things.
1. Decide early whether you will hire someone else to do your taxes. While professional tax preparation can be costly it could end up saving you money if you make an expensive tax mistake or get audited. If you don’t feel confident about your ability to prepare your taxes you may want to consider hiring someone. Decide early as tax professionals get busy and you want to make sure there is plenty of time to get your taxes prepared.
2. Prepare. Do all you can to make the preparation of your taxes go as smoothly as possible. Make sure your accounting and bookkeeping are up to date, receipts organized, and your last years’ taxes pulled for reference (especially if someone new will be preparing your taxes).
3. Bookkeeping. Be sure to separate personal and business expenses and income, download transactions or other needed paperwork from your bank including credit card statement, organize receipts.
4. Schedule. Schedule time for working on your taxes in your calendar otherwise you may end up cramming it all into one weekend. Why torture yourself and your family like that? Spread it out, schedule it and take it in small bites.
Like I said, tax season is already upon us for this year but here are some practices you can put into place right away that will make next year easier.
1. Purchase small business accounting software. I don’t know about you, but I’m a bit of a doofus when it comes to numbers and accounting of any kind. While the initial cost of accounting software may seem high I know that I haven’t had a “bounced” check in a very long time. That alone has saved me a whole lot of money.
2. Reconcile your accounts on a monthly basis (or more often if your accounts see a lot of activity). I have a reminder on my phone for Mondays at 2pm and Thursdays at 2pm to update my bank accounts. Even if I miss one of the days I’ve got the other one as a back up. This schedule helps keep my finances in order. Also, I set aside the last Friday of the month to do all of my end of the month accounting and bookkeeping. I gather all of my receipts, write little notes on them if I need to, look over my credit card statements and balance my bank accounts. I make a cup of tea and schedule 1-2 hours for the job. If I finish earlier then I have some “found” time to do something fun.
3. Run reports monthly. You can get a lot of useful information if you run some of the reports, such as Profit & Loss, in your accounting software.
4. Get help. If you are intimated by numbers and keep putting the job off or if you have a high volume of transactions it may be time to find a bookkeeper. Ask among your family and friends to see if they know someone they trust and can recommend. You never know, you might find someone who is try to escape their J.O.B. by setting up their own accounting business and you can help them get off to a good start.
I know I said it at the beginning but I’m going to say it here too. Don’t put off taking care of your taxes and paperwork. I know from experience that it only leads to more work.
What tips and tricks have you learned to help you keep your financial records in order? I’d love to see your ideas in the comments.
By: Vicki O’Dell, The Creative Goddess
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