Start Preparing NOW for 2013 Taxes

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Hopefully you got all your paperwork done and either submitted your taxes for 2012 or gave them to who ever will be doing them for you by now.  So that you don’t get as stressed out next year here are a few pointers to keep those records straight all year long without much fuss or bother!  Simple is always the way to go.

Tip#1-    Buy colored file folders. Use one color for your Schedule C (business) and a different color for your personal items.  For your business file folders-mark one invoices, one bills.  If you want to get real fancy—buy an accordion folder and label the different sections for the type of invoice (if more then one company) and the types of expenses.  For the personal items- file folders will probably be best. MAKE SURE TO SAVE ANY BILLS FOR HOME IMPROVEMENT ITEMS separately as you will need these if you ever sell your home.  Bank and investment statements should also be kept!  Records for businesses must be kept for about 7 years—personal items for at least three.

Tip#2-     Create an excel spreadsheet for your business.  At the top –put the name of the company and the year  Go down 3 rows-in column A type “date” – in column B type “name:–Column C- type “amount.”  Go down a bunch of rows and in each of the columns type the expenses you have ie: advertising, rent, computer supplies, cost of goods sold (if you buy and have inventory on hand. Make sure to add a column for TOTAL Expenses. You have just created a very simplified Profit and Loss Statement!  You can always insert rows as  needed.  These columns can now be added to a total or sent to your accountant as an attachment.  Remember to add the columns for income separately—then the columns for expenses.

Tip#3-     Personal items that should be kept on an excel spreadsheet are contributions, medical expenses, prescriptions, etc.

Tip#4-     You can always try your hand at keeping track on one of the software packages.  With Quicken you can have one company for your business and one for your personal and most of the other programs can as well.  Just be sure not to co-mingle the two!

If you do the above then at the end of the year all you will have to do is total columns-print—pick up the folders—add the government forms and you are good to go!