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 :)