Each year, we need to go through paperwork and create some order so we can give it to our accountant, right. We may have to go through piles and piles of neglected papers and receipts to find those tax deductible gold copies that will help us. We all gather these receipts each year, but we don’t have to spend a lot of time doing this task. I swear we don’t have to spend a lot of time at all.
Here are my favorite tips to help be better prepared for the end of year business return.
First, before you get too far into the new year, pull out all the receipts and any other files from last year and store them into a long-term storage box or cabinet. Pulling out all the records from last year will give your cabinet more breathing room for the new year, and you can revisit the files to make sure nothing was misplaced.
Gather vendor invoices and ensure that you have them in one folder. If you have several invoices for each vendor, sort them in order by date and paperclip or staple them together. This helps me have all the invoices for each vendor in one place. I also like to put a sticky note on each stapled packet of invoices so I can find the name of suppliers quickly if I need it.
For customer paid invoices, gather up all the invoices and group by the client if needed. This task helps with any discrepancy with 1099s from your customers. I do the same thing as above.
- Sort the invoices by the client and by date.
- Staple or paper clip each client’s invoices together.
- Add all of it to one folder marked “Invoices Paid – (Year)”
Payroll paperwork should be swapped out, and a new binder should be created for the new year. I like to use double pocket tabs from Avery just in case; I have different paper to store in the tax agency section. Having binders for payroll really helps keep all the tax offices separated and organized. Years ago, my mother, who was a payroll guru, had me create binders for all her clients. It worked wonderfully, and the customers truly appreciated the organization. No one wants to lose any papers, and we especially don’t want to lose payroll tax paperwork.
Note: Payroll companies give you copies of all the returns submitted in your name. If you have a payroll agency, make sure you store all the paperwork divided by month, quarter and year-end. This order will help if you ever have to go through the paperwork on your own.
Now, it’s time to review the existing filing folders you have for storing the different receipts. Does the system work? If you have many small receipts, buying a freestanding small accordion folder works nicely to organize all of them.
Now that you took all these papers out and stored them in your long-term storage, you can extract just the tax paperwork needed for your accountant and place them in a portable accordion folder. I particularly like this one below. It holds everything including the paid invoices. The 13 Tabs accordion folder with a cover works best.
I hope this helps you minimize the amount of time it takes to set up your files when preparing the taxes. Now it’s your turn. What is your favorite tip when organizing your papers for tax time? Please leave a comment below.
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