Filing your individual tax return is a task that many people dread. So many people find themselves putting it off until the last possible minute. What happens, though, when your tax return needs to be submitted?
The tax-avoider must stay up all night, with their stress levels soaring through the roof. The worst part? They follow the same method for years to come, making them fear tax time more than they fear the dentist.
You don’t have to be one of these tax-fearers. Instead, follow our five record-keeping strategies to streamline tax time.
Go paperless with digital bookkeeping
Most documents are now paperless, and bookkeeping should be no different. Aside from doing your part to limit waste, you’ll find a digital document is easier to edit, quicker to produce, and you can even build in formulas to help you calculate figures.
You’ll need a system to keep and track contracts, invoices, receipts, and other supporting documents. If you have a team, it’s recommended that you use an online system so they can access the files without you having to send them via email.
Bonus tip: Ensure all your invoices have a unique invoice reference number. Store this on your bookkeeping system, so it’s easily accessible.
Know the documents you need to store
There’s nothing worse than scouring your laptop for documents you deleted months ago, believing you’d never need them again. The best way to avoid this is by knowing which documents you need to keep for governmental agencies. These can include:
- Employee contracts and client contracts
- Bank statements
- Insurance documents
- Business registration documents
- Legal documents
- Previous tax returns
Your tax return will be far easier if you know where to quickly locate your proof of income, deductions, and credit.
Track and monitor your business expenses
Of course, you can check your bank statements at the last minute, but they don’t always state the product or service you purchased. The best thing to do is to keep an expenses tracker. Note down all expenses, even if you don’t think you’ll end up including them on your tax return. Not only will this make tax time more straightforward, but it will also help you monitor your business’s outgoings, which is especially useful when calculating your monthly and annual profit.
Fill in your tax return online
Completing your tax return can be a long-winded process. If you choose to do it online, however, you’ll find it takes minutes. Be prepared, and have all your necessary documents on hand. You will considerably reduce the amount of time it takes to handle the submission if you monitor your bookkeeping sheet, keeping it up to date throughout the year.
Make use of payroll and accounting software
Payroll and accounting software makes tax time simple. Not only will it allow you to implement automation and have technology do the hard work, but it also keeps track of your invoices, receipts, contracts, and other important documents you may need for your tax return.
Remember, technology can get it wrong sometimes. So, schedule regular checks and backups to ensure all your data is accurate and ready to be used when tax time comes.
Prepare for Success
Tax time can be a stressful period and can cause anxiety for many of us. However, if you track your data over time, keep the documents you need, utilize technology to make your life simpler, and file your tax return online, you’ll discover that it can be a time of simplicity. Who knows? You may just look forward to tax time in the future.