If you paid your taxes this year, you may have realized that your organization systems are lacking. Did you have the cliché box of receipts? Did you have to spend hours calculating expenses and income? Did it take you a full day just to gather the papers and information you needed just to pay your taxes? If you answered yes to any of those questions, then now is the time to make next year’s tax season much easier.
Step #1 Look at This Year’s Tax Return
Take a look at the information you pulled together for this year’s taxes. Chances are you had:
* Income statements
* Expense statements
* Bank account statements
* Credit card statements
* Receipts
* 1099, W-9s or other tax forms
Make a list of all of the different types of information you have. You’ll need this list in the next step.
Step #2 Create Your Systems
Your systems may have three major components. You’ll want a place to capture or collect your information. For example, you may want to create a file folder to gather the month’s receipts.
You’ll also want a system for cataloging the information. Let technology bear the burden here. You can use something like NeatDesk to help you keep all of your information organized. You can also use accounting software to sort and organize everything. And you can use a combined approach too.
The third part of your system involves you and your actions. This is where most systems fail. If you don’t follow through on the system you create, you’ll end up in the same place next year. Namely, you’ll spend way too much time paying your taxes. So when you’re devising this part of your system, make sure it fits your lifestyle and personality.
For example, you might decide that you’re going to enter your income and expenses and file your receipts at the end of every day. If you can’t follow through on that, then it won’t work. Consider how much time this step will take and when during your day, week, or month it makes the most sense to focus on it. For example, you may decide that the first Sunday of every month is the day you file and record the last month’s information. This is something you can schedule in advance and prepare for.
Step #3 Follow Through and Assess
As you get a few months into your system, it’s important to take a step back. Ask yourself what is working and what isn’t. Look for ways to streamline any processes and make life easier for yourself. What can you automate? How can technology help you spend less time on these tasks?
When tax time rolls around next year, you’ll be glad you took the time to get and stay organized. And if you decide to hire an accountant to manage the job for you, you’ll have everything they need ready to go. You’ll save yourself time and money.
FURTHER READING:
Business Budgeting for Beginners
How to Create Wealth to Grow Your Business: A Guide for Entrepreneurs
