While some of you might be nursing off that hangover or catching up on your beauty sleep, we recommend you start thinking and working on your taxes before the tax season starts. It’s monotonous and unexciting but there’s no way around it.
Save yourself the trouble of filing taxes in a rush and missing the official due dates and paying penalties; start organizing your finance and have a stress-free tax filing in April. You will also have the perfect opportunity to review your finances. Just start early.
Start with making an account list
Begin your tax preps by making a list of all your accounts. For those of you who run a business, we advise you to make separate lists: one for your personal accounts and the other for the business accounts. Don’t miss out on anything- credit cards, bank accounts, retirement accounts, investments and every other type of financial account that you have. Even list out open and unused accounts.
You might end up finding non-credit accounts that are inactive, old or stale and will have the time to close them. Keeping unused bank accounts is senseless. Also, keep a check on all the accounts and transactions on your business accounting software so that you don’t miss out any details.
2. Maintain a steady pace of bookkeeping
Yes, you ignored your bookkeeping tasks last season but you shouldn’t do that now. Get copies of all the core documents like your annual income statement, the Profit and loss statement and the balance sheet to prepare for the taxes. If you are a slacker and have too many transactions to review, it’s probably a good idea to start early and sort out the mess before it’s too late. Make sure that your books are accurately done and you shall have mastered the key to tax season success.
3. Draft a checklist
We don’t mean a usual to-do checklist here. We want you to list out and organize all the tax forms from your Social security forms to forms relating to your investments and mortgages you will need this season and have them handy. You can choose to do that digitally on an Excel file or use Google Sheets or you can simply print your spreadsheet or even better write them down using a pen and a paper. You will save yourself another visit to your accountant (and of course, the expensive fees and penalty).
4. Create a Folder
Do this when your forms arrive in your inbox or your mailbox as they will be easier to handle that way. You will reduce the chances of misplacing or losing a form if you keep them together in a folder- physical or digital. Every time you receive an envelope or an email with tax information, just add it to this folder. You can even use Dropbox to back up all the physical and digital copies and be ready to get your taxes done.
5. Choose an Appropriate Tax Filing Method
Not everyone is blessed with a brilliant accountant or have the money to hire one. Or some of you might just prefer doing your own taxes because you are confident enough and think you know your business pretty well. Whatever the case may be, choose an appropriate tax filing method. You can use a software or hire a professional just make sure you are comfortable with what you decide. Just thoroughly review your taxes before signing and sending it.
Taxes aren’t as dreadful as they seem to be
You might hate the tax season, but they don’t have to be the worst part of your finances or your business. Find your own ways to make the whole process faster, easier and cheaper. It feels great when all your taxes are done, no, taxes are correctly done, doesn’t it?
Don’t wait for the official due dates and get down to it already!