Kick your “pile it and file it (later)” attitude before spring cleaning season has you thinking about organizing your garage. I’m talking about getting your tax prep habits geared toward a more sustainable system. A well-organized tax prep system could save you big money if your accountant charges by the hour to go through your big, messy envelope of receipts that are out of order and half rubbed out. Though the April 30 filing deadline may be months away, your company should be thinking about ways to make that period as smooth as possible.
It might seem old school, but I’ve got the solution to your tax organization woes. If you’re over 35, it’s probably the system you got from your parents; taught by watching them rifle through their little paper folder systems, eyes shifting from one homemade label to the next to find those darn receipts. This technique may sound like “bookkeeping for dummies,” but you’d be shocked at how many people get toasted on their taxes because they didn’t keep their receipts in order and therefore didn’t get to deduce everything they should have. Save yourself from the madness of sorting through messy drawers and boxes jammed with paperwork link.
Here’s the best way I know of keeping receipts in a visually organized, hard copy form, where they are easy for your accountant to understand. http://st-pierre-les-becquets.qc.ca/map192
General receipts click the following article
Receipts for everyday purchases and subscriptions. https://www.hometalk.com/member/48204477/ecpcdumakake
this web page Major purchases
see more Big purchase receipts, like technology, enterprise-level software, education or office furniture.
Real property and cars click here
File here your receipts for everything from car repairs and leases to rent or property purchases visit web page.
This year’s deductions
Receipts that back up deductions for this year’s taxes. If you make quite a few small purchases throughout the year, create a small envelope for each month and file them that way within this folder.
- Always make notes on your receipts to indicate what the expense was for and if it pertains to the general business operations, a job number or a particular client.
- Collect receipts for business expenses in your folders as soon as you get them.
- Use an envelope in your car glove box to collect receipts you receive on the road, and remember to file those away every time the envelope starts to fill up.
- Have a folder for each month at a bare minimum, or sort them into folders for each kind of expense. It’s imperative that you keep all receipts for your credit card together and attach them monthly to the credit card statement.
TIP: Keep your personal and business banking separate. The CRA could come down on you with a lot of questions if they see personal stuff on your business account. The same thing goes for your business credit cards.
While the folder technique is the way to manage hard copies of receipts, I also recommend picking up a way to save digital copies of the receipts too. Use a scanner or take photos of the receipts with your smartphone. There are 1,000 ways to do it and zero excuses to not having backups of your important tax-related receipts. Do keep your digital receipts in the “Cloud” or on an external drive in case your computer breaks down or gets stolen.
Finally,I can’t stress how important it is to hire a bookkeeper with experience. A student may know a few things, but theywon’t have the hands-on experience a small business needs—no matter how organized your receipts are. Anyone can enter things into software, but there must be a thorough knowledge of the tax system present as well. Maybe you can ask your bookkeeper what organization system they swear by and adopt that—I bet it has something to do with paper folders and neat little labels, too.