How do you sort your paperwork for your taxes? Do you have it all thrown in a bag or drawer somewhere in your home and then in January panic because you now have to sort through it all? Do you have it scattered all over so that when you go to get ready to do your taxes you have to go to several places in your house and dig for them? Or, do you have a system where you sort your tax paperwork as the year goes on and so when you get ready for tax time they’re all organized and in one place? If you’re like the majority of the people it’s all over your house in different drawers and bins.
Since I’ve always been an organized person I have my own system that has become just part of my normal routine. That’s why my tax man last year told me he wished all his clients would have their paperwork organized like I do so he just has to plug in the numbers. Since I have my business, my categories may be different than yours but in general it should work for anyone.
During the first week of January I set myself up for success for the year by creating and labeling different plastic folders for each type of expense that I need to keep track of all year. You could also use regular colored file folders but I’ve found that the plastic ones with pockets keep mine from falling out every time I pull it out to add more to it. For me, these include:
Medical/Doctors and Prescriptions
Tax and Licenses – this includes what I paid my tax preparer last year and my car license renewal
- Postage & Shipping
- Cost of Goods Sold
- General Office Supplies
- Travel Expenses
- Mileage – more about this later
- Phone Expenses
- Any new office equipment
- Commissions and Fees
- Legal, professional and education fees
- Meals – if traveling
- Contract Labor