Blech.
It’s THAT time of year again. Well, maybe you’ve already dealt with it, but for me, pulling my tax information together is one of those uber-procrastination issues.
Some of my colleagues use Turbo Tax, and I have a few friends who have recommended it highly, but to tell you the truth, I’d rather clean out a slaughterhouse than try to put my own taxes together. It’s as much an emotional issue as anything — I’d probably need therapy if I had to figure out both a new computer program AND which column what number goes in at the same time. Considering the cost of therapy, an accountant is cheaper in the long run. I have a very nice competent person who is willing to look at all my various lists and sort them into categories and add everything up and tell me what I owe. Only downside: He wants my stuff, er — soon.
In nearly 20 years of self-employment, I have figured out a few things to help smooth over a proccess I’m not very good at.
1) Keep good records. Some people use spreadsheet programs like Quicken. I’ve actually drawn up my own Excel program to keep track of income from various income streams. Whatever you do, keep it up to date. I log all checks before depositing them. Cash and barter income has to be accounted for as well, if you have any. (I don’t; I prefer checks because they are traceable, but if you’ve got any retail products, you probably have some cash to account for. Keep up with that, because you’ll never remember.)
2) A business checking account and a business credit card separate out business expenses from personal ones.
3) I try to pay for everything with debit card so that I have a receipt record AND a record on my bank account of where all my business expense money went. It’s a back-up system that means I won’t forget any expenses.
4) Keep a log of expenses: What they were, what they were for; how they relate to your business. Ideally, your annual log should have all business related travel expenses, home expenses that have a business application, office and business equipment, repairs, advertising, etc. If you get audited down the road, such a log makes it clear what you were doing, what its purpose was, and how it pertained to your business.
5) Your accountant is probably pretty busy right now, but after April 15, while things are still fresh, set up a time to talk with him or her, especially if your business has undergone any major changes (such as a new income stream, a new category of expenses, or you’ve found yourself making significantly more or less than usual). There may be some things you should be thinking about to get ready for NEXT year.
And now, if you’ll excuse me, I have a bushel-load of papers to go through….
