December 6, 2012

Tax Season Is Coming - Five Tips For Keeping Your Finances Organized

Being a work at home Mom, I always do my own taxes. I have found out through the years, somewhat the hard way, how important it really is to keep your finances organized so that I know just where everything I need is when it comes time to prepare my taxes. For this reason and since I know a lot of my readers are work at home parents as well, I thought it would be good to break up all the Christmas talk with some tips on getting organized for tax season.

1. Keep all receipts. No matter what they are for. I found out a few years ago about keeping receipts. I really didn't know that I could write off half of the things I was buying or paying for. Yes of course they were for my business but I didn't realize that I could include them as expenses and things. I always keep my receipts, but more than just throwing them all together in an envelope. I separate them as I go all year long so that they are easier to work with come tax time. For example, I have a drawer in my filing cabinet that is just for receipts. I have a folder for each type of receipt such as; office supplies, mailing & shipping expenses, food, medicine, clothing, gas, car repairs, etc. This really helps when working on my taxes so that I can find each item easily and not have to dig through what seems like a thousand receipts. It also helps to make sure I don't miss anything.
2. Keep all invoices. Whether you are sending invoices out or receiving them for you to pay or even paid invoices that come in things you have ordered. It is super important to keep them all. I never realized that I would need invoices that I sent out to people. Well when it was time to do my taxes the first year I had to figure out my self employment income I was completely lost. I didn't record anything and never kept a copy of the invoice so I had no way of knowing really how much I had made. An other thing I didn't think about was keeping invoices I received, not even thinking about the fact that I do order a lot of business materials and supplies online, even though I may have already paid for them, these were my receipts that I could use for my expenses.

3. Keep a mileage log. It is very important when you are considering writing off gas expenses and things that you have a detailed log of your mileage. I learned a few years ago through a friend of mine that happened to get audited that this is needed to prove how much gas you are using for business. I keep a small notebook in my glove box so that when I use my vehicle for business I can write down my start mileage and end mileage each time I use it.

4. Keep paid utility bills. Did you know that if you work from home you can write off part of your utility bills on your taxes as an expense? Well you can. Think about it, you use electric, phone, and internet to run your business right? Well paying these bills is an expense. It is very important to keep these bills that you have paid so you can figure out exactly how much is being used as a business expense.

5. Mailed check or direct deposit? This is something everyone that does their own taxes really needs to think about. Are you going to wait on them to mail you a check or are you going to have your return direct deposited. I have run into a lot of people that say "But I don't have a bank account". My answer is always the same thing, "Use a prepaid debit card." Visa prepaid debit cards are perfect for this. You can have your tax return and even commission checks or many other things direct deposited right onto your card. You don't need to worry about overdrafts or anything with them either. Direct deposit is much faster and in my opinion safer than a mailed check too.

I know that it took me about 3 years of doing my own taxes and scrambling around looking for things that I thought I lost or even missed some things because I wasn't organized. This caused a lot of hassle when it was time for me to do my taxes. Another thing I had to worry about was not knowing or being able to find my account numbers or routing numbers for my direct deposit. Prepaid Visa has created the Know Your Numbers instant win game to help people get use to knowing their account and routing numbers for income tax season. Consumers will have the chance to win either a Tablet PC or a $15 Visa gift card while learning the importance of knowing their numbers. To top that off, each game play gets consumers a chance to win a $2000 Visa Gift Card.

I would love to hear some more tips and ideas on keeping organized for the upcoming tax season. What do you do to keep everything straight and make things easier for yourself during that time of year?

 I am blogging on behalf of Visa Prepaid and received compensation for my time from Visa for sharing my views in this post, but the views expressed here are solely mine, not Visa’s. Discover more at http://www.VisaPrepaid.com or join the Visa Prepaid community at http://www.facebook.com/VisaPrepaid.

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3 Busy Moma's Thoughts:

MikiHope said...

Actually this is very good advice! Being a bookkeeper you would think that I would keep meticulous records--but no--I wait till the last second then scramble lol--I do use Quicken-but a simple excel spreadsheet will work just as well for a one person business!!

Samantha said...

This invoice gives the detail info on bill of the material which has been delivered or which needs to be delivered to the client which also includes all kinds of Tax percentage in it.

Heather said...

Some really useful tips. I am very guilty of being un-organised when it comes to my paper work, bills and invoices as I don't have the time. But I'll try your tips. Thanks :)