Tax Prep Tips

It's that time of year again...Tax Time! Are you one who waits til the last minute to get your tax papers in order? Do you stress about finding all your receipts? Do you vow to do better next year?

I'm here to offer a few tips on how I keep everything organized throughout the year so taxes are a breeze come the first of the year.

I can't help you much with your 2011 taxes, but but I can help you can get your 2012 taxes organized NOW!

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I find it best to break taxes into manageable time lines. There are things I enter immediately, things I enter monthly and things I enter quarterly. I use Excel to organize everything, but there are several other ways you can do this. Do what works for you.

Immediate Entries

I have started to enter my local sales on the day I get paid for them. I tend to forget about them if I don't enter them right away.

Monthly Entries

*Each month I print out my Paypal statement and enter the data in the correct column of my Cost Log. You could also copy and paste the data from the CSV download as well. I'm a visual person and like to write notes on my statement, so I print mine out.

*I also keep all of my receipts from the month in a baggie and enter those monthly as well.

*Just this year, I've started keeping a monthly Profit Log. It details what items sold, how much the materials cost, Paypal fees and Etsy fees. It doesn't take into consideration when I buy things in bulk or any other overhead. I just wanted an item by item profit log to see how I'm doing.

Quarterly Entries

I pay my state sales tax quarterly, so I update my Sales Log quarterly as well. My locals sales are already entered, but I transfer my data from Etsy and enter my consignment sales as well. I break my Sales Log into sections so I know which sales I collected taxes on and which ones I didn't. Then I make sure to note why taxes were not collected on these sales (wholesale, out of state, etc.)

Keep in mind that you can do things differently and still stay organized. You can enter your sales monthly if you like and enter your Paypal data weekly, etc. Do what works for YOU. But make sure you do it!

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Have any good tax tips? Share them with us in the comments!

5 Easy Tips to Get Your Tax Preparer to Love You :)

I have been filing my business taxes for 3-4 years now and along the way...I have learned a few things :) Today I thought I'd share with you the things I have learned that make your tax preparer love you!

Tip 1: Keep all your receipts...but not in a shoebox!

I have a file cabinet just for my business documents. I keep all of my receipts and invoices in files separated by year. (ie. Costs 2008)

Tip 2: Do not bring this file to your tax preparer!

What do tax preparers hate the most...a year's worth of receipts! I keep all of my costs and sales in Excel Spreadsheets in chronological order. This is very easy to do and just takes a little updating throughout the year. I print them and bring them along with me to my appointment.

Tip 3: Make your Excel documents work for you.

I organize my Cost Log into 7 categories: Date, Company (purchased from), Inventory, Supplies, Utilities, Internet, Fees. I use these specific categories for different reasons. Your categories should work for your specific business. I have a separate room in my house for my business, so I am able to write off part of my home's expenses...therefore I have the Utilities section. Also, I use the Internet specifically for my business, so I am able to write off the entire bill for this. If I had a separate phone line, I would be able to write this off as well. Figure out what sections you need and make them work for you. Add categories as needed...this is the first year I have added Fees to my Cost Log. I put my Etsy fees and shipping fees in this category.

Tip 4: File your sales tax quarterly.

This tip is more for your benefit than for your tax preparers, but it will help everyone out in the end :) By filing your taxes 4 times per year, this forces you to organize your income at least that often. It will leave you less to do at the end of the year :) And if you have to open your Excel document and organize your income...why not do your costs as well! This is my first year selling on Etsy, so I added these sales to the bottom of my Sales Log to show their income. I didn't want them added into my quarterly sections because I did not charge sales tax on them. (out of state)

Tip 5: Have everything with you when you meet with your preparer.

This will save you the time of meeting multiple times and making more work for your preparer. I always schedule my appointment for early to mid-February. This way I am sure that I have received all of my needed paper work. (W-2s, tax forms, credit card statements with last year's costs, etc.)

Follow these tips and you will be in and out in about 20-30 minutes and you will leave your tax preparer with a smile on his/her face :)

Do you have a good tax prep tip? Leave me a comment...I'd love to know :)