For those of us in the U.S., this time of year is the time we are all very conscious of “Tax Prep” (Our filing deadline is April 15th).
When I was growing up, it was an AWFUL time. My dad was self employed and my mom HATED paperwork and the whole process was a true nightmare (not to mention the compounded stress when they were ripped off by a criminal accountant which led to years of hassles.)
When I went out on my own, I swore that I would not live with “Tax Prep Stress”
What did I do?
- Since I started my business I have put aside 30% of all income into a “Tax account” so that I’d never have to scramble for those quarterly payments.
- I committed to keeping accurate and current records (I use Quicken & QuickBooks, but find a system that works for you, and use it)
- I found an honest and detail oriented accountant (Thanks Francis P. Flynn CPA!)
- and I made a promise to him that he’d have all my paperwork by the end of February.
Today I sent everything off to my CPA for my 2018 return to be prepared – 2 days earlier than last year!
Full disclosure: with the new US Tax laws, this year I WAS more apprehensive because some rules have changed, and I wasn’t sure how things would shake out. But with my CPA having my back, and his emailing me not to worry, that he’d make sure everything was right, I am much calmer again. (Yes, my CPA is that awesome that he emailed me assuring me that everything would be fine!)
How about you? Are you ready for next year’s tax prep?
A few quick tips for my self-employed friends:
- Deposit 30% of any income that you earn into a separate bank account dedicated to taxes. And don’t touch that money except to pay Uncle Sam!
- Keep accurate & current records. The 10 minutes you take today to enter that check you wrote or that withdrawal you made can save you hours next year.
- Keep your Business & Personal accounts separate
- Have 1 Business and 1 Personal Credit card (it makes record keeping easier!)
- Reconcile your bank and credit card statements every month. Again, 10 minutes at the end of each month can save you hours of figuring out missed transactions months from now
- GET a Professional CPA! You’re a professional in your business, get a professional to handle your taxes.
If you are just starting out, start setting up good habits now, before you get busy! If you are already in business and not happy with the system you have, change it and find a system that works for you. There is no perfect system But a simple system you USE is better than a new-fangled one that you don’t.
Some items that have helped me:
- FILE-IT file folder calendar: I have used these for years and love them! I have one for personal expenses and one for business. As I get them, receipts get put in that month’s folder and at the end of the year they are all there by month.
- Eccolo file folders: whether you chose the ones I like to or colored ones, I like them a lot better than the plain manila ones!
Take deep breath and don’t be afraid of the numbers. (They’re going to be there anyway, and as a good friend told me recently: “Don’t worry, it only causes wrinkles!”)
So now…go start a file for 2019 taxes and put it somewhere that’s easily accessible so you can keep track of the papers starting today!