How to Prepare for Taxes.
How to Prepare for Taxes
This would pertain to a sole proprietor or an LLC. I first blogged as a sole proprietor and after October 2016, as an LLC.
I am letting you know some things that I do to stay organized for tax season. Having a system in place throughout the year can help you avoid anxiety and headaches right before tax time.
Accountant – Find a great accountant who focuses on small businesses. Make sure you feel that you can trust them. If you don’t already have an accountant, make sure you research local ones and meet/interview at least 3 before deciding on one. Make sure their bookkeeping services are affordable for you. You have to decide if you need monthly bookkeeping services and/or just year end tax services (I have both done).
Documentation – Scan all your receipts. Keep a box where you can put all your receipts so that you do not lose any when you are busy. Remember, everything has a place. You can get all the supplies you need in one trip to Staples/your local office supply store or an order from Amazon Prime (see below for a shopping list). Pick a time of the day/week/month/year (if you wait until the end it will take hours and days to finish scanning telling you from previous years experience 😉 Save those receipts for 7 years, after which you can shred them.
Track Mileage (Mile IQ app) – I use the Mile IQ app and it’s great. Before that I used a mileage tracking log that I purchased from Staples.
Shredder – keep a shredder near your desk and shred all paperwork that has business/personal information.
Organization (throughout the year) – keep a document box that is waterproof that you can keep labeled folders. Organize those folders by month and quarter. Here’s a shopping list of supplies that I have put together to help me organize everything for tax time:
- waterproof document box (clear, have one for every year)
- letter-size manila folders
- folder holders for filing (green, these should come with labels and those plastic label holders for easy filing)
- receipt scanner
- labels (return address size, I use Avery or Staples brand)
- label maker
- highlighters (several colors)
- colorful pens (I use thin Sharpies)
- Planner (physical) – I use the “Passion Planner” to help me stay organized throughout the year.
Quickbooks (online) – This is software that your accountant can track all of your accounts, income and expenses in one place. I use and recoomend it but there are several online accounting services out there. “Freshbooks” is also one that I know other bloggers like and use.
Banking – Find a bank that is convenient (local) and one that doesn’t charge you excess fees. Do your research on banks that are local to you. Also have a business Paypal account which is useful for any business that is online.
PDF scanner app (for your smart phone) – This is very helpful to have right on your phone in case you have to send a W-9 or other document out quickly.
How do you prepare for your taxes? Please let me know in the comments below! Thanks, Sara