Hey guys! Welcome back to my series on getting organized and preparing for income tax time!!
I touched on inflow sites in the introductory blog post to this series, (if you haven’t read that, you can check it out HERE) , but the two main inflow sites for my business expenses are digital invoices (via e-mail) and paper receipts. Today we will be focusing all our attention on those digital invoices in your e-mail inbox! Since I use Gmail, all of the examples and screenshots I will be using below will be for a Gmail account. Don’t worry, if you have yahoo or some other kind of provider, they generally have similar functionality…it just might be called something different.
So without further ado, here we go!
1. Setting Up Your Labels
The very first step before tackling your inbox, is creating your customized label! I have multiple labels that I use for my inbox organization. They are all divided up into two subcategories: “Action” and “Reference”. It’s not important that you create all the labels I have or that you set yours up exactly like me…but you will need at least ONE label to use to keep track of all your expenses. I call mine “Enter in Tax Spreadsheet” (original title, i know). Feel free to name yours whatever you like. I also set colors up for my labels because I’m a visual person. I picked green because when I think of expenses I think of money, and when I think of money I think of green. Again….totally optional.
To create this label, simply click “Create New Label” which is found on the left-hand side bar of the e-mail window at the very bottom. If you can’t find it or are having trouble here is a handy LINK that shows you how to create and use labels.
Ta-da!! You did it! This is the label we will use to apply to ANY email in our inbox that is for a business expense. It will keep everything together which comes in super handy when it’s time to compile the list of expenses at the end of the year.
2. Labeling Your E-Mails
So now that your label is created, you can easily apply this label to any e-mail that comes in which has info you need for taxes. The nice thing about applying this label is that it removes it from your inbox so it’s not sitting there staring you in the face all year. It’s like checking of a to-do list item (which always gives me such a sense of accomplishment).
Now, I try my VERY best to try to get to an “Inbox Zero” state at least once each day. Trust me. I have been the person with 5,000 + emails in my inbox and it’s not fun. If you need help with this as a separate issue, I plan on doing a separate blog post soon on how I have my entire email organized and how I keep it up with very minimal effort. I will also be talking about how to get started if you already have a big mess of an inbox like I did.
Anyways, back to taxes! As shown below, when I get a new e-mail that needs to be saved, I simply open it up, click the folder icon, click “Move to”, then choose our label we just created. The e-mail disappears from the inbox and now can be accessed at any time by clicking on the “Enter in Tax Spreadsheet” label to the left of the screen. This is ONLY preparation I do ALL. YEAR. LONG. I just stay on top of labeling incoming emails and that’s it. Easy peasy!
3. Saving Emails as PDF’s
Once the end of the year hits, it’s time to do the “hard work”, or what used to be the hard work for me. Some people may feel comfortable just leaving these in their e-mail and not creating PDF versions of the documents. However, I am not that person. I think it’s very important to not solely rely on your email housing the back-up documentation for your income taxes. No one wants or hopes to be audited, but it if it ever happens YOU are responsible for providing this documentation. It won’t be your CPA’s problem or your e-mail provider’s problem if you can’t find or provide the receipts to the IRS for which you claimed expenses for, it will be yours! That’s scary to me! So that’s why I do this step. I keep them on my computer which is backed up to a hard drive and to the cloud so I have these documents in essentially four places.
Moving on to creating the PDF versions of these e-mails and attachments.. Since all my business expense related e-mails/invoices are all congregated under one tag, there is no searching around at this point. I just pull up my “Enter in Tax Spreadsheet” label and there is a years worth of business receipts. I used to try to PDF these guys one at a time and boy did it take forever. I researched and found a new program that works AMAZING and takes me less than five minutes to do the whole year. The company I found online through a google search is called “cloudHQ”. The extension is called “Save emails to PDF”. You definitely don’t have to use the same company I did, but since this extension has worked so well for me I’m going to show you how to use it. Feel free to google search or just use this link to download the extension to your Google Chrome browser.
Once the extension has been installed, refresh your e-mail in-box to ensure that the new add-on is showing up. Start out by clicking on the label we created “Enter in Tax Spreadsheet” to open up the list of all the e-mails that have this tag. You can manually click the ones you want to download or just click the check box and to choose all. Note the message you see in the gif below. If you have more than one page of e-mails, it will by default only select “all” on that one page. Be sure to click like I did to show ALL e-mails from ALL pages in the label if you want to do them all in one go. If you have downloaded the “cloudhq” add-on, you will see a special button in your Gmail that usually isn’t there. Click on that down arrow and choose “Save all conversations to PDF”. You will have the choice to save them all as individual files (what I do), or as one big huge PDF with multiple pages. You also have the choice to include attachments (if the e-mail has any) to the PDF as well which is SUPER handy! If you need more help, check out their blog post here: https://blog.cloudhq.net/save-as-pdf/
CloudHQ will chug-a-lug on that for a while and send you an e-mail once all the files have been converted and are ready to download. You just click on the link to download the zip file.
Once it’s opened you will see that they so graciously have named the files starting with YEAR-MONTH-DAY followed by the subject of the e-mail. It should look something like the image shown below (on the left). I like to further organize these documents by dragging them into “monthly” folders like shown below (on the right). This makes is super easy when entering these into you excel template spreadsheet to do a month at a time of entering so you can keep track of where you are.
With CloudHQ you get 300 free saves per month for FREE which is exciting. This may be motivation for some of you to do this whole process on a monthly basis. If you wait until the end of the year instead of doing them monthly you may have more than 300 emails. If you’ve waited (like I always do) until the end of the year and have more than 300, there are ways you can still download your PDF’s for free. They offer a really cool kick back to increase your 300 quota by tweeting about them, posting on linked in, writing a blog post, or inviting your friends to try. If you aren’t into that kind of thing, you can just pay for a subscription as well. I wanted to share this though in case you are looking for a free way to use the program!
4. Clearing out Label Queue
Once you’ve verified that the PDF’s have downloaded and they are backed up, be sure to go back to that label in your Gmail and remove the labels from the e-mails that are done. This will help you keep track of the ones that have already been PDF’d. You have two options for doing this.
- Just remove the label. You can highlight the e-mails in the same manner we did above by using the check box button. Then a button will appear with the text “Remove label”. The e-mails will disappear, and now when you click back on on “Enter in Tax Spreadsheet” label those emails will no longer be there.
- Change to a NEW label. You can create a label called “Done” or “PDF’d” or whatever else you want to call it. Then instead of just REMOVING the label, you can change to the new label you just created. It will disappear from your “Enter in Tax Spreadsheet” label so you won’t be confused if it’s done or not, but it will also have that “Done” label on it so if you ever reference back to the e-mail you dont’ have to wonder if it made it in your spreadsheet.
So there you have it! This is how I keep my e-mail receipts organized for taxes. I can’t say enough about how important this step is. It has shaved hours off this part of the preparation process. I used to try to gather my receipts up monthly back when I did it the old way, and now I just do it one time at the end of the year. It used to take me HOURS (let’s be real more, like days….weeks…) and now I can do it all in less than 15 minutes. Happy PDF’ing!!! Don’t forget to come back tomorrow when I will post about how to deal with all those PAPER receipts you have everywhere! I know about your shoebox!!!
Links to the Entire Series: (Text will turn to links as posts are uploaded)
Part One: Overview and Introduction
Part Two: Organizing Expense Receipts (E-mail) (THAT’S THIS POST!!)
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