After many years of owning a business while also working as a W-2 employee and filing jointly with my husband, I've got a pretty good system for ensuring nothing gets left behind when it comes to documentation and numbers. This makes our interactions with our accountant so much easier. Here are the tips and tricks I use to ensure we are tracking appropriately starting January 1 - even if you have multiple businesses or a complex return.
Do you feel confident in your tax prep system?
100% yes!
Somewhat - I know there's room for improvement
Not at all - I need help!
But first:
There are two hacks I use throughout the year that help me maintain clean books, and help make tax time a lot less stressful. Check these out:
Ready to move on? Let's go!
Tip 1: Have a physical folder ready to save all your mailed documents.
Each year in early January, we take out a new file folder and keep it right between our desks in the office. Any time we get a paper tax document in the mail, it goes directly in the folder, which is labeled with the appropriate year.
When everything is said and done, we file the folder away in a file box with all the previous years' folders.
Tip 2: Keep an electronic folder for all your documents and your checklist.
In our family google drive, I have a folder titled Home, and under that folder, one called Taxes. Each year has its own folder where we store electronic files, copies of physical documents, and our Tax Prep Checklist.
When a new year comes around, I simply create a new folder, then copy last year's spreadsheet into the new year's folder.
Tip 3: Block time for uploading docs and updating your checklist until it's done.
We usually have a goal of getting our taxes done by the end of February, and physical documents aren't always mailed until late January, so for each week in February I block 20-30 minutes to organize documents, search for electronic ones, and check things off our list. This way, it doesn't feel overwhelming or like it takes a whole day to finish everything.
Here is the checklist I go through each time block:
Take inventory of the physical docs we have and check them off the spreadsheet
Scan physical docs and save them in that year's tax folder in google drive
Search for electronic copies of documents like 1098, W-2, etc., save to tax folder in google drive, and check off list
*Bonus* (Do this if you can!): Use an accountant who accepts files electronically.
Our accountant's website has a portal where we can upload documents directly to his office. It's super fast & convenient, and we haven't had to go in for a physical appointment since pre-pandemic! (In case this makes you concerned about personal touch, don't worry - he is very responsive to emails and calls whenever a conversation needs more context.)
Once I have the majority of the documentation we need, I begin uploading to our accountant's website. When I've uploaded something, I check off a separate box that indicates I've uploaded it.
*PRO TIP*: depending on the website your accountant uses, you may want to consider a naming system for the files. I usually name them with our last name, the year, and the type of doc, for example:
Hayes 2022 1098
Hayes 2022 Premier Ops Spot P&L
No electronic upload option? No worries...
You can still use the same system even if your accountant doesn't offer this. We didn't begin using this until 2021 out of necessity. Prior to this, I still kept all electronic files in a folder, then printed them, stored them in our physical folder, and brought them into the office for our appointment.
Want my tax prep bundle?
You can purchase my Tax Prep Bundle, designed especially for small business owners, so you are ready for taxes next year! It includes...
A free tax checklist (google sheets)
My built-out Finance folder structure to help you save your receipts easily throughout the year (google drive)
Simple Transaction Tracker with Profit & Loss (google sheet)
My Profit Protection Workbook for tracking your expenses and ensuring you always stay in profit (PDF w/ link to Google sheet)
Tutorial videos on how to use everything
Click below to purchase!
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