As I mentioned earlier, you’ll begin to hear other “voices” via guest posts that I’ve commissioned. And with two-weeks left until the U.S. tax filing deadline for personal taxes, I couldn’t think of a better post than one from Valeri Hall Little – a business efficiency designer and productivity consultant. A combination sorely needed at this time of year, especially if you’re scrambling to pull together your tax-related paperwork :)!
Did you know the average person spends 21 hours assembling and completing his or her tax return? That’s a huge chunk of time you could spend doing other things that you actually enjoy.
Let’s face it; getting ready to file your personal taxes is never fun. Even if you outsource this task to an accountant, you’re still responsible for getting all the paperwork ready so they can do their job effectively.
If you’re looking at a big pile of financial documents right now … or searching for one that has been misplaced, I feel your pain. I’ve been there myself, more than a few times. It always ends with me making a promise that I’ll never go through this torment again. The last few years I’ve kept this promise by following a few simple steps that I want to share with you now.
Make it Easy on Yourself…in 5 Simple Steps
1. Set aside focused time
• Block off 1- or 2-hour chunks of time to organize your financial records.
• Motivate yourself. Put on comfortable clothes, pour your favorite beverage, put on some music. Whatever you have to do to make this task more enjoyable, do it.
• Remove distractions: turn off your smartphone, close your email, log off your social media channels. This has to be uninterrupted time.
2. Select your tools
• You need the right tools to organize your financial papers. I use an accordion file folder and label the tabs according to my needs. Examples include:
o Taxable Income Statements
o Deduction Receipts
o Previous Years Return
Tip: to figure out your tabs, use last year’s tax return as a guide.
3. Seek help
Even if your income tax return is relatively straightforward (i.e. single income, basic expenses and small investments), seek out the services of a certified public accountant (CPA). But this is extremely important if your situation is more complicated (i.e. business owner, numerous expenses and write-offs,). Could you do your taxes yourself, probably. But it isn’t wise when you think about tax code changes and the like.
4. Set up your system
• You don’t want to do this work all over again next year, right? To avoid this, create a system that will make it painless next year. Here’s my system:
o I keep my tax accordion file in my filing cabinet beside my desk. Each time a tax document comes in the mail, I immediately file it in this folder, in the appropriate tab.
o At tax time, I give the entire accordion file to my accountant.
o When I get my tax return back, I file it and all supporting documentation in my Tax Box (see below).
o I return my tax accordion file to my filing cabinet and repeat this process.
• Use a bankers’ box to store all your previous years’ returns. Make sure you label it Tax Box and store it in a location where it will be away from moisture.
• To figure out how long you have to keep your documents, check your government’s website.
• To get ready for the current year, simply re-use the accordion file folder (tabs will be in place) and put it in your filing cabinet.
These five simple steps have saved me countless hours and gray hairs! Getting organized once will save you time, money and energy next year and beyond.
Valeri Hall Little is a business efficiency designer + productivity consultant with intandem. She puts people back in control of their lives and businesses by helping them organize and systematize. Sign up for her e-book, CLEAR Your Clutter: 5 Steps to Move you from Chaos to Control.
You can connect with her on the Web, Twitter, Facebook, LinkedIn and YouTube.
p.s. don’t forget about tonight’s webinar – “Do You Have the Mindset to Be Debt-Free” featuring Mindy Crary, CFP + conscious money coach. BTW: organization definitely plays a role in how you experience debt!
p.p.s. You know what’s not so hidden on pg. 94 of the April issue of Ebony Magazine (@EBONYMag)? Muah! Yippee!! Check out my piece for “Ebony Connect U.”
p.p.p.s. the virtual, three-month experience for couples – Master the Language of Love + Money – launches in May!!! Stay tuned for details.
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