If tax season were like Christmas, you’d definitely file doing your taxes under “last-minute shopping.” Not only is it time to prepare last year’s taxes, but it’s also important to get this year’s taxes rolling as well. Compiling tax data last minute can be stressful and confusing. And trying to throw together important information regarding the success of your business under pressure will surely lead to costly mistakes. Here’s a list of helpful organization tools that can cut your tax preparation time in half:
Don’t store all your tax records in one file. Keeping your tax records all in one place can lead to lost items and mismanagement. Try purchasing organizational containers like plastic tubs and label them with the tax year. Items like vendor files, appointment books, bank records Insurance policies, capital asset files, investment accounts, real estate and capital improvement files are important tax documents that need to be filed together under the same tax year.
Track your mileage. If you use your vehicle or cell phone for business you’ll want to track your usage accordingly. While cell phones can be easily archived through your bill, your vehicle is different. The IRS asks for your total mileage on the tax return, so try keeping a notebook in your vehicle and tracking your mileage for each trip.
Collect all of last year’s tax documents. If you haven’t done this yet, create income tax files for last year and this year – and make them stand out. Throughout the year as taxable transactions occur, collect all documents in the file. Filing documents like third-party reporting documents such as 1099s, K-1s, W2s, 1098s, etc., and receipts for tax deductable transactions immediately when you receive them will make data compilation much easier. After archiving these throughout the year you can simply grab the file, a back up of your QuickBooks data, and head out to your tax pro.
Go green! Welcome to the 21st century! Now welcome your bookkeeping system as well, and purchase up-to-date digital accounting software. Most accounting software programs are easy enough for the non-accounting professional to use. Now tax return preparation, financial and tax planning are simplified because of the comprehensive reports generated by a decent accounting program. Imagine not having to peruse through your filing cabinet for hours at a time, and simply pulling it up on your computer instead. Furthermore, these digital files are easily transferable and take up less space. Although, beware of the caveat – computer crashes are not uncommon, and losing all your important files in a “virtual fire” can ruin you and your business. Be sure to implement a routine backup plan where the files can be stored outside of your hard drive.
There are myriad tips that can help you and your business organize your taxes throughout the year, making last-minute tax preparation less of a headache. If you have tips of your own that you’d like to share please let us know!