Tips for How to Be Proactive for Tax Time

There are reasons why we procrastinate and wait until the very last minute to get our accounting records up to date. We can change this around by focusing on a few things outlined below:

Identify the Problem

Real change can happen after we identify a problem and work to change it. I use the word “problem” lightly because for some it really isn’t so much a problem, but a way of life.   Maybe there are too many distractions in your days to allow you to focus on real-time accounting of your records. Real-time, meaning every transaction is entered in your accounting system as they happen. Not only entered, but also categorized and reconciled, so we know and trust our totals are correct. Take a moment to let that sink in.

Real-time

Real-time means we can take a look at the checkbook balance in our accounting program and know it is the correct balance after deducting any outstanding checks and reconciling. People who operate small businesses wear many hats and usually lack accounting skills. So accounting is the furthest thing from their minds until a bill is due or taxes need to be paid.

Don’t Procrastinate

Well, just stop procrastinating. Easier said than done. I know, I know. We tend to procrastinate when tasks seem too difficult or too overwhelming, hence all the waiting until the last minute to gather records for tax time.

The Key is Choosing the Right Tool

The task is not nearly as big as people tend to think it is. It is more what you use to complete the task instead of the task itself. If you have a large, cumbersome accounting program that took you forever to learn and you are using only a fraction of what it can do, then maybe it is the wrong fit for your business. It’s time to switch to the right tool to make your life a lot easier and keep your records up to date.

Keep Your Receipts Organized

Maybe it is not your transactions that are weighing you down, but the receipts. Once again it’s not the receipts you obtain as much as the system you use to control them. Let’s say you have receipts in your car, some in your home, and your assistant has receipts too.  How do you control all these receipts? How do you tame that paper tiger? Here’s how! You get a hold of receipt storage books with paper envelopes you can write on. You keep one in your car, one in your home, and give one to your assistant.

Using a receipt organizer is an inexpensive way to store receipts and save them for tax time. Think about it…how many different types of receipts do you have? Maybe three or four. You probably have a lot of restaurant, gas and supply receipts. Write those categories on 3 different envelopes and stuff the receipts in the envelope for later. Done! Or maybe you want to store your receipts by month. So all of your January receipts will be stuffed into an envelope that says January, and so on.

It’s a fact that unorganized people pay more to have their accounting records completed at the last minute. On top of that, they will most likely have to file extensions, and all those things cost more money. So save yourself some time and money, and get your accounting under control. Do it now while it’s fresh on your mind. You can do this! The first step is believing you can.

Happy Bookkeeping!