It’s January and you know what that means!!! It is almost Income Tax time!!! I know, I know…taxes and spreadsheets may not be the most fun topic for a majority of the population. If you’ve been in my “About Me” page you know I went to college for Accounting, so numbers and spreadsheets excite me a little more than they probably should. In college, I interned with a CPA firm preparing individual’s income taxes, which I absolutely loved. My background has REALLY, REALLY helped me now that I own my photography business and I wanted to pass along some things I’ve learned along the way. This was me the day I graduated college with my accounting degree back in 2011. I was just a baby!
As much as I love numbers and spreadsheets, I also won’t pretend that going through a year’s worth of receipts trying to get everything ready for income taxes is a very fun task. It used to take me FOREVER. No lie. When it came time to sit down and do the all the pre-work that is necessary (finding and adding up all my receipts, etc) BEFORE filling taxes I would just started felling so overwhelmed. This was mainly to do with the fact that I didn’t have a workflow or system for attacking my huge pile of receipts/expenses.
One huge stumbling block i always had was what I like to call an abundance of “in-flow sites”. For instance, if your order something online, oftentimes you will receive your invoice via e-mail. This sounds so super handy doesn’t it?! Now, what happens when you get that order in the mail? Sometimes you will get a paper invoice too…but by the time you get the package do you remember if you already received the invoice in your e-mail? Should you keep the paper copy anyway just in case? Okay, so now you may have two copies. Well at least that’s better than no copies right? But where to put it….hmmm….well, I am a digital person, so I think I would like to scan it and save it on my computer. But since I only scan once a month, it’s going to sit in a pile somewhere until then, if I don’t lose it first. Plus, I will still have all my receipts for items that I buy at Wal-Mart to deal with, too. Also, since I have a laptop and a desktop, once I scan the files, they may be on either computer depending what I had available to me at the time I scanned them. Also, now I have a year’s worth of invoices in my emails to go through beacuse I probably didn’t save them as they came in. Or maybe I did for a while and then stopped and I’ve lost track of where I was at. Then January hits! It’s time to get everything together to start adding up your expenses and you can’t even start because your head is spinning and your receipts are all spread out in 42 different places and you just feel COMPLETELY overwhelmed.
Does this sound at all familiar? Well, if it does, I’m here to help! This past year I have worked really hard to set up a system that works for me and so i thought I would share it all with my fellow friends/followers/photogs in hopes that it helps you, too! I am sharing my workflow for both what I do during the year to help prepare for tax time as well as what I do at the end of the year to get all my receipts/expenses organized and ready for income taxes. Once you’ve read through this series and become an organized tax preparing ninja, you will be as excited as me and my siblings were here. See numbers and spreadsheets and taxes are cool and fun and exciting!!! HAHA! Your welcome ?
Since this is such a lengthy topic, I’ve decided to break it down into six parts to make it a little more bearable to read and get through! As I get each part written, the text below will turn to links!
Part One: Overview and Introduction (That is this post! You just read it! LOL)
Part Two: Organizing Expense Receipts (E-mail)
Part Three: Organizing Expense Receipts (Paper)
Part Four: Figuring Income (Sales Tax Bonus Discussion)
Part Five: Other Steps in Preparing for Taxes
Part Six: Using a Template Spreadsheet for Totaling Expenses
Let me preface the rest of this series with a couple disclaimers.
1. While I do have an accounting degree, have prepared numerous tax returns, and work in the accounting field, you should ALWAYS check with your own personal accountant on what they recommend/require in order to do your taxes correctly and completely. The tax laws are different in every state, so it’s important that you consult with a professional for your own specific tax needs.
2. There are NUMEROUS programs and software out there if you are a larger business that will work much better for you than what I’m about to recommend. I have worked extensively with Quickbooks and I love it. I know that program like the back of my hand and as awesome as it is, it’s just not worth it for me in my small business. If you are much larger than me, that may be the way you need to go. The way I’m about to show you is MY way and just happens to be ONE way to do it. I find this way to be much simpler for the volume of business I do in a year and it makes tax preparation go so much faster. I hope it helps you!