Professional Organizers Canada – Tips to Tame Tax Time Terror
Tax Prep is Nothing to Fear!
One of the chief reasons we delay filing our taxes relates to being disorganized. We don’t know where the papers are located; and we don’t know what we need. We dread the search and process, and putting it off is a common reaction.
Collecting and organizing documents for taxes is really not that difficult, it just requires a designated system be in place every year. Otherwise the volume of this paper clutter gets out of control, we become overwhelmed.
Separate your documents into three major categories:
- Income, Expenses and Taxes
- Only keep the documents of the current year and the previous year close to where you work. Reduce clutter by putting archival and aging documentation elsewhere in your home, labeled appropriately.
- Have a clear understanding of what needs to be saved and for how long. If in doubt, ask your accountant, lawyer or other advisor for a retention policy to follow.
- Schedule a block of quiet time to undertake this work – arrange for child care if necessary and keep your concentration instead of doing it piecemeal over a period of time.
- Teenagers can help you with the work. It’s a great experience as they enter the working world. Have them match receipts to statements or enter gas bills into a spreadsheet. They’ll be managing their own finances in a few years.
Small Business Owner?
- You must keep receipts for 7 years (scan or photograph them with your smart phone). Jot notes on them if you’re going to deduct them as business expenses.
- Use debit and credit cards – no cash – to better track your expenses and then combine statements with receipts.
- Keep zippered plastic bags and a pen in your car, briefcase or handbag. Each month, label a fresh bag with the date, then collect and transfer any appropriate receipts. It will be easier to sort through 30 or 40 receipts at a time than 500 at the end of the year.
- Use software programs like QuickBooks or Quicken (non-business); that way you can look up payments by name, date, amount, or number; balance your cheque book without doing any math; never forget to enter a purchase in your manual bookkeeping system, and have automatic tax reports generated at the end of the year.
- There is plenty of help out there, and it’s definitely worth the investment. A reliable bookkeeper or accountant can help you find ways to save money.