6 Ways To Clean Up Bookkeeping Disasters Before Tax Time (And Save Big Money)
Do you have all of your (bookkeeping) ducks in a row for the end of the tax year?
Bookkeeping itself is a full-time job. Putting a strategy to it takes even more energy, education, time, and planning. It’s the kind of thing that many business owners tend to shove under the rug, intentionally or not. (And honestly, who could blame them?)
But here’s the deal…
Organizing your paperwork is ⅔ of the battle. You might be paying MORE in the long run because of the messiness of it all.
Here’s how that works.
If you’re investing in an accountant, I’m guessing that you’d prefer them to focus on saving you money rather than organizing your bookkeeping mess. But the more disorganized your records are to start with, the more time your accountant will spend sorting them all out.
While there’s no real harm in giving your accountant last-minute piles of paperwork, it does increase RISK. I’m talking about the risk of not meeting deadlines, which could result in unnecessary penalty fees. Or the risk of filing your taxes with incomplete or inaccurate information.
There’s even the risk of your CPA firing you at the last minute out of sheer frustration, and having to find a replacement (the LAST thing you need in such a moment).
All of these factors can end up costing you in time, stress, and MONEY.
If you want to save money on your accounting bill, avoid possible late fees, and decrease your overall stress, consider getting your bookkeeping house in order NOW.
If you’re not a naturally organized person, consider delegating this job to someone else. An accountant who doesn’t mind the extra work or an administrative assistant can be a lifesaver in this case.
But if you’re determined to get your bookkeeping messes cleaned up on your own, I can help!
Here are six useful tips to help you organize your paperwork (AND prevent a mini-breakdown when bookkeeping and tax time rolls around).
1. Create a paperwork filing system that works for your brain. I organize my paperwork both online and offline into two major categories, business and personal. From there, I organize them both by year, then by type. All the following steps I’ll talk about here will utilize this first step. So create this foundation, and it will make everything a lot easer. So first, think about how you like to see things set up, and then create it from there!
2. Save your business related receipts (bonus if you label them!). Once you get payment confirmations in your inbox, file them under a folder named “receipts by year.” You can also forward them directly into your QuickBooks Online system, if you’re a QBO user.
Another option is to save receipt copies in a folder organized by year. (We use Dropbox for this purpose). That way, if you ever need to dig receipts for auditing purposes, they’re easily accessible.
Not only does this immediate action help you organize your inbox, but you also know where to find your receipts when you need them.
Pro Tip: for things like meals, entertainment, and travel, be sure to write who you met with and what the meeting/event/trip was for.
3. Save PDF versions of your bank and e-merchant statements MONTHLY. Save these statements in an online filing system such as Dropbox, and save them EVERY MONTH.
Here’s a little-known fact about bank statements: some banks only allow you go three months back with electronic statements. Some banks even charge you to get historical data.
So be sure to save each statement each month when you receive it. It will save you time and money in the future.
4. Go through that stack of mail. We all have it! That stack of mail/paperwork/receipts that gets piled up and ignored. Unfortunately, if you’re an entrepreneur, ignoring won’t fly.
Twice a year I go through my paperwork and organize it in the appropriate folders, paying special attention to anything tax related. I scan anything I know I’ll need to share with my CPA or accountant and save it under “tax documents for year 20XX.” I also upload any relevant receipts into my QuickBooks online file.
5. Update your mileage (in real time, or monthly). Your business-related mileage is an amazing write off you don’t want to miss. It’s also a serious pain in the ass to remember all that mileage at the end of the year if you haven’t been keeping track all along!
This is where a mileage-tracker can save the day (and save you money in the form of a write-off).
If you don’t use QuickBooks Mileage Tracker, another option is MileIQ to track your mileage in real time. The advantage of tracking your milage in real time is that you only have to save one annual report.
Of course, the old-fashioned way of mileage-tracking is still an option. If you are manually recording your mileage, be sure to update your records monthly, and include the purpose of every trip.
6. Set up accounting software such as QuickBooks. Having an all-in-one accounting system like QuickBooks has multiple benefits for your business. Quickbooks can help you get paid faster and track your income more efficiently. It can also file 1099s, estimated tax payments, and meet tax deadlines on time. It’s a great system if your business is ready for it!
QuickBooks is a fantastic multi-purpose system if your business is ready for it, so keep it in mind!
Don’t let being disorganized end up costing you time, energy, and MONEY. Take these simple steps to keep your books organized. Not only will they help your accountant help you, but they’ll also eliminate unnecessary stress.
Almost makes bookkeeping sound like fun, right? 😉
So tell me, what is your biggest bookkeeping organization nightmare? Leave me a comment and let me know how I can help you take charge and get organized before tax time!
Until next time,
Love, Light, and MONEY, Honey…
Kaylee