Now that your taxes have been filed (hopefully!) there are a few things you can do now to make next year’s tax prep faster!
If you don’t already use a software program to track your income and expenses, this would be a good time to start. You can then use this information to quickly help you with budgeting. I am a fan of QuickBooks Pro since it is user friendly
and works for household finances as well as business finances.
Gather your receipts and put them in date order. This will help you catch anything that was separated. It is a good idea to tape smaller receipts to paper to condense your filing system. Put all receipts for one day on one sheet of paper (or more if needed). This system is more user friendly than a category system since you don’t have to worry about misfiling anything and not being able to find it later (as I have learned from experience).
Now you can set up your filing system. The easiest system is a January through December system where each month has its own folder. Also create a folder labeled Tax Info. This is where you will put anything that you or your CPA will need to complete your tax return. Keep these folders in a portable file box or a filing cabinet so that the information is not stacked on your desk. Or on the counter. Or in the kitchen drawer.
Entering your receipts to your software program would be the next step. Once you have entered these, you can balance your month end bank and credit card statements. To stay organized and on top of your finances, enter your receipts on a daily or weekly basis at the latest. The more often you do this, the better records you will have and your financial story will be better prepared.
Having good records as I have described above helps keep you audit proof since you will have proof of every transaction. Good record keeping also helps you to be financially responsible.
Comments