Some of my friends despise numbers. They gag at the sight of them. Okay, maybe they don’t actually gag, but they do occasionally break into the cold sweats. So when it comes to tax time, they have potential to develop a serious case of hives and/or procrastination. Here’s a little secret: preparing for taxes is much more about organizing than it is about math. Some (we hope) helpful organizing advice from The Bacana Plan:
- Create a folder in a safe place (your private Dropbox folder, a password protected area in your documents folder) — something that is easy for you to access but has some level of security to it. Call the folder “Taxes 2012.” Whenever you receive documents related to your taxes by email or download (paperless is good!), save them in the Taxes 2012 folder.
- Gather all the documents that have arrived by mail, open the envelopes, and neatly stack the W9s, 1099s, K-1s, etc. Put them in a file folder in a secure place in your home office. If you have a scanner, scan and save them in your Taxes 2012 folder as well.
- Go through all electronic docs and paper files and make sure that all necessary docs have been received!! From investments, donations, interest, any and all employment, real estate, etc. Whatever has not yet been received, make those calls and send those emails NOW to make sure they are on their way to you.
- If your accountant has a packet of forms for you to fill out in advance of tax preparation filing, fill it out in pencil now. (Do it in pencil so you can easily adjust the numbers if new information comes in before your appointment.)
- Once all docs are in order and any preliminary forms are filled out, make an appointment/plan ASAP to get your tax info to your accountant or to meet with your accountant by the end of March at the latest. (No rushing or anxiety mid-April!)
- If you’re not meeting with your accountant in person, there are a few ways to get documents to him/her securely. Please don’t just send them by regular mail! Some possibilities: (1) send hard copies via FedEx or UPS; (2) set up a shared Dropbox folder that only you and your accountant can access, and put electronic files in there; (3) use a service like yousendit.com or sendstuffnow.com to send a zip file of your electronic documents to your accountant. Those are just a few. The key is to make sure that there is some amount of either access protection or encryption involved.
- How long do you need to keep financial records? The IRS can answer better than anybody. Check this out.
- Once you’ve determined what needs to be kept, you can shred the rest of it. Remember, if there is any question as to whether to keep or whether to shred, the answer is KEEP. But KEEP can certainly be as an electronic document so, either way, shredding and getting rid of paper are on the menu.
- If you need any help with the tasks above, the team at Bacana can help organize papers, count deductions, sort receipts, set up an electronic filing system meeting IRS guidelines, etc. Contact us if you’d like some tax prep assistance.
- The new year has only just begun. If you feel you’re in need of a new 2013 bookkeeping system for your personal finances, remember that we are available for a helpful consultation as well.
- And why not go ahead and start a Taxes 2013 folder right now, too?!
- Enjoy April!
Any additional tips? Leave them in the comments below.