As you can see from this infographic, the self-employed are not the early birds when it comes to early tax filing. It seems that the early filers fit a certain profile: Married, working full-time and 25-34 old women. The reason is probably that they have a W2 and a few itemized deductions or even the standard deduction. It’s not quite as simple for us divapreneurs. We have to keep lots of records, and that makes early filing a little less feasible, but it doesn’t have to.
We want to remind you that we’re not tax professionals, but divapreneurs who have been there and learned that good records matter. Consult your tax pro for more tips on what records you need to keep for your business.
Here are five steps to making the record keeping easier and the tax filing a little less stressful.
Separate your business expenses from your personal expenses.
It’s tempting to use the same checking account and credit cards for all of your expenses, but when it comes to keeping records, this can be a nightmare.
Start smart and separate those accounts and expenses. You’ll make your life easier and keep better records with this one simple move.
Get in a scanning habit.
A scanner can help you eliminate the paper clutter and lose fewer receipts. Set up a time each day or week to deal with the pieces of paper. You can spend five minutes scanning and labeling and then be done. Be sure you have a place to keep up with them – envelope in your glove box or small expandable file for your purse. Make it a habit to store them in this place until you can sit down and scan.
Always make a note on the receipt.
Make a note on the back of the receipt for what this purchase was for. If you receive a digital receipt in your email, specify a folder or label for these receipts so you don’t accidentally delete them.
Get online storage for your records.
No one wants to keep old paper lying around. Once you’re in the scanning habit, set up a cloud folder so you can always access your financial records. You don’t want to store everything on your hard drive because it could crash. Get a backup account with a service like DropBox. You can store on your local drive and backup to this cloud drive. It’s a one-time setup and well worth the time. And don’t worry, these accounts are secure. Just be sure to store your information somewhere safe.
Get a bookkeeper.
Bookkeepers are worth their weight in gold. They don’t cost a fortune and can help you make a big difference come tax time. We recommend making this one of your first outsourced hires. For a few hours’ pay a week, you can find more money to deduct at tax time by simply having someone keep good records. When looking for a bookkeeper, find someone with skills in organizing, tracking and documenting financial transactions.
Here’s to a better tax year through better record keeping.