Tax Time – Setting Up Your Files

The trick to setting up your files is there is no trick. Implementing a system that is simple and approachable is the key. It should be easy to manage and encourage frequent filing. Here are some tips on how to begin prepping your files for the tax season.

  • Use file folders and marked storage boxes to keep records organized – keep files for each year separate and easy to find.
  • If you have a filing cabinet, put the current year’s files in the filing cabinet and move them out at the end of the year to storage boxes.
  • For expenses, set up the files according to the line items on the tax schedules.

Keeping personal files separate from business files will also make your life easier when getting things in order for Uncle Sam. Here’s a breakdown of what might be in your Personal File.

  • Tax Papers
  • Bank Statements
  • Credit Card Statements
  • Income
  • Expenses

Personal Expenses can be broken down further into the following sub-categories:

  • Car
  • Charitable Contributions
  • Childcare & Eldercare
  • Medical
  • Real Estate (can be broken down by expense type per Schedule E – Mortgage Payments, Property Insurance & Taxes, Repairs & Supplies, and Utilities)
  • Personal (can be broken down more if you want to set up a budget)

If you have several businesses, keep a separate set of files for each business. Here’s what you should keep an eye out for and maintain in your Business File(s).

  • Tax Papers
  • Bank Statements
  • Business Loan Statements
  • Credit Card Statements
  • Income
  • Expenses

Business Expenses, like Personal Expenses, can be broken down further into the following sub-categories:

  • Charitable Contributions
  • Client Billable Expenses
  • Client Non-Billable Expenses
  • Contractors & Employees
  • Insurance
  • Legal and Accounting Expenses
  • Meals & Entertainment
  • Office Expenses
  • Office Rent
  • Telephone
  • Travel
  • Utilities

So, there’s the trick to a no trick filing system; implementing a system that’s usable, accessible, and approachable. It’ll help get you in tip-top shape for tax time and hopefully set you up for a less stressful one. Be on the look out for more of my Tax Tips in the coming weeks as we creep closer and closer to Tax Day.

Post authored by Elizabeth Metura 

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1 comment
  1. Pingback: Tidbits « Praxis

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