If you find yourself stressed out this time every year, trying to find papers and receipts to give to your accountant, you’ve got to be thinking, “There must be a better, simpler way!” And there is. Think about it. Like Christmas, tax time comes the same each year so there’s no reason not to be ready for it. I know that circumstances change with homes, businesses, investments, etc. But if you have the usual numbers ready to go, getting the totals on your tax forms should not be that difficult. It’s a matter of keeping good files all year long.
6 Tips to Organizing Your Files for Taxes:
- Write down the categories of papers that your accountant asks for. Not everything you gave him last year, because often people give the accountant way more than they ask for only to pay a higher price for the accountant to sort and make sense of it. So give him what he wants and no more.
- Make files for those categories. I’m a big believer in specific folders for: Business Expenses, Medical Expenses, Investment income, Income receipts, charitable contributions, etc. Think in terms of your line items. If you have one filed just called “Tax Stuff” you’re going to have to sort it next year anyway. Put the files close to your desk and drop in statements and receipts all year long. At the end of the year you can tally and staple these receipts together, voila – no more sorting for the accountant.
- If you have your own business or you travel for business, keep a mileage log in your car. For every appointment write down the starting and ending mileage, total mileage and purpose of the trip. At the end of the calendar year, tally up the mileages and take your deduction allowed by the IRS. You can also use an app on your phone to do this.
- If you have business expenses for your work, use one credit card for only business purposes. If you have a card that offers a year end statement – that’s perfect – they will categorize your expenses for you! For miscellaneous cash expenses for business, just remember to get a receipt and drop it in your Business Expense file.
- If your family needs to keep track and itemize out of pocket medical expenses, have a folder for those receipts as well. Or you could make all medical payments on one credit card, and use those statements for the year so you don’t have to keep receipts. You can keep another Medical file for each member of the house which contains medical reports, labs, diagnosis, etc. That you keep forever. The expenses file you can clean out each year.
- No need to keep weekly paystubs once you get a correct W2 form. And no need to keep ATM receipts if you are balancing your bank account every month. The monthly statements will support the transactions.
- Once you have your tax “back-up” ready, pull it out of the filing cabinet and put it in a manila envelope marked with the year. In some cases you may need a banker’s box. Give the accountant what he needs and then file the completed return with all the back-up info. As you put in this year’s, shred the tax file that is 6 years old. *
*always check with your accountant about what you can toss – everyone’s circumstances are different but 6 years is a general guideline.
What tips do you have to keep tax info easy to find? Leave a comment:
Like a magician who reveals his secrets, I’m about share with you my lessons organizing. I have written two books on the subject (now combined into A Mom’s Guide to Home Organization) so you can read the book, follow the steps and then it as a reference for whenever you have your next organizing project. But think of this as the “Cliff Notes.”
1. Allow for 8 hours per room – Many people think an hour or two should do it, but that’s not a thorough organizing job. For a full room – a full day. Chances are it took several years to get into this current state of disarray. So now you have to find the time to make it better.
2. Pick a point and work clockwise – I usually pick the worst corner to tackle first. If the floor is cluttered, de-clutter it first so you have room to move and sort.
3. Clear surfaces first – Floors, counter tops, table tops and wall hangings should be taken care of first. Then get into closets, drawers & cabinets.
4. The process is CPR – Categorize, Purge & Re-Arrange. Categories can go in boxes or on the floor. If one category is too big, you may have to sub-divide it. For instance, papers in an office might be divided by subject matter or put into categories like: new mail, files, bills, work & personal, or reference material. Have trash bags or boxes ready for your purged items. These may be broken down into: trash, donations, recycle or move out of room. Do not re-arrange until you have gone through everything in that room and thought about a logical place and an appropriate container for each category.
5. Add your finishing touches – Once the CPR process is complete, you can make a shopping list of items you may need to add to the room. These would include pretty bins (which many people make the mistake of buying first to organize), decorative pieces or practical items like a trash can, hangers, or lighting fixtures. Don’t forget to take measurements. If bins are going on a shelf or in a closet, measure the height, width & depth. Nothing is more frustrating than coming home with the wrong size organizing bin.
There you have it! With 8 hours and 5 easy steps you can now organize any room in your home. The trick is focus, perseverance and decision making.
Do you think you could do this trick on your own? Leave a comment.
So many parents I know are trying to do the same thing I am: have their own business so they can be at home when they need to be, have a flexible schedule and still make money. It’s a noble cause but one that takes extreme discipline and dare I say…organization. Here are my five basic steps for organizing your home-based business.
1. Set Your Hours – Figure out when you like to work and when it’s convenient for your family. This might depend on the age of your children and what your spouse does for a living. Don’t make the mistake of letting your customers dictate your schedule. Many new entrepreneurs say, “I’ll do any job whenever someone will hire me.” That can cause a lot of chaos and stress. If you clearly state your hours on your websites you will find clients that are open those hours. Also, make your family aware of when you work so they don’t expect you to be at their beck and call either.
2. Keep finances separate and simple – When you start a business, you should open your own bank account for that business and a credit card account for the same. This will help keep your income and expenses separate from your personal ones. Enter these numbers in Quick Books or an Excel Spreadsheet once a month. Also have a guideline for percentages of what you need to pay taxes, what you can take as an income, what you want to put back into the business. Here’s an example:
- 25% for taxes
- 30% back into the business
- 30% to your savings
- 15% for your personal draw or pay.
Play around with those percentages and tailor them to your needs and financial situation. Then each month when you do your books take out the savings and pay and put into the appropriate accounts so you don’t overspend for the business.
3. Provide excellent customer service – Your customers are the bread and butter of your business so keep them in mind always! Return calls or emails within 24 hours even if it’s to say, I got your message and I’m working on an answer. Send out a newsletter once a month and offer a special discount 4 times a year. Reward customers who give you referrals.
4. Create an office that’s productive – You’ll need
- shelves for inventory or books
- A desk with drawers for supplies and files
- Open desk space for doing your actual work.
- An “In-bin” or “TO DO bin” right on your desk so it’s always obvious what’s next on your list.
- A bulletin board above the desk for urgent reminders or posting long term goals for motivation!
5. Track how you are getting your clients – A simple spreadsheet will do for keeping track of all your customers. Make a column for how they found you. This will help you evaluate all your advertising and marketing. If one has not brought results, drop it. If another brings you great results, keep going with it or increase it. Evaluate these at least every six month.
Finally, when you get in a rut in your office, take the time to clean it out & straighten it up. Don’t just close the door and move your stuff to another room. Take your laptop with you if you need a change of scenery. This may do wonders for your concentration. I often move my laptop when I am working on a creative project like writing or designing a new talk. But at the end of the day, it all goes back in the office and everything is in its place.
Do you have a question about organizing your home based business? Ask me here.