In the first two parts of this series, I gave tips on how to sort and file your tax information. In this final article, I talk about other folders you might have in your organization system, keeping electronic records, and when to hire a tax expert to help you get your home office tax information organized.
You may have expense folders categorized by different home businesses you operate. Also, you should have one hanging folder per tax return year. In that folder should be all the related information that was reported just in case you are audited. You need to keep all tax information for the past six years plus the current year. Each year, you can purge the oldest return information and securely dispose of it using a shredder.
Keeping Electronic Records
Even if you keep electronic records using spreadsheets or accounting software like Microsoft Money or Intuit’s QuickBooks, you should keep hard copy records of all income, expense, and deductable you will be reporting on your taxes. The reason for this is the advent of a computer crash or the problem of outdated software should you have the unfortunate experience of being audited. This being said, using electronic records can greatly streamline your taxes. Several programs can import your information directly into TurboTax. You can also email your tax accountant all your information at the touch of a few buttons.
You can print out your records once a month so that you have a hard copy. Both Money and QuickBooks offer reports features that allow you to print out just the relevant tax information. Then, you can staple the report to any supporting documents you might have. If you use a spreadsheet, you can print out the month’s spreadsheet for your hard copy records.
Don’t Be Afraid to Hire an Expert
If your tax needs are complicated, don’t be afraid to hire a tax accountant to help you out with the process. Maintain meticulous records to help her along, but don’t fret over the nuances. At the beginning of each tax year, discuss with her any categories you should be looking for as places for deductions, as a second pair of eyes can be helpful. Also, don’t overlook her suggestions for organization - she’s an expert for a reason.
For more information on electronic records keeping, you may wish to consult the following Bright Hub articles:
“Home Office Accounting Software Made Easy” by Brian Nelson,
“The Best Billing Software for Your Home Office” by Ronda Levine,
“Microsoft Money Review” by danahinders.
This post is part of the series: Organizing Taxes
This is the second part of a three part series on organizing for taxes.