Now that your 2005 taxes are done (right?), you can start right now preparing for 2006. If you’re not happy with all the work you had to do getting it together for the IRS, here are some ideas. Note: these tips are most suitable for small business owners.
A colleague of mine, whose dad is a CPA, recommends keeping receipts in hanging folders that correspond to Schedule C categories. This article has a good description of what goes into each category, and what categories a freelance writer is most likely to use. Here’s an example of a readymade system with prelabelled folders in their own box.
To keep your receipts company, maintain a record of income and outgo, in Quicken or your favorite money managing program. This record should also separate expenses into Schedule C categories. Even if you’re not sure of some items, doing some categorizing as you go will save lots of time come April.
If you’re extra lazy and don’t have much in the way of overhead, you can simply pop all your expense receipts into one folder. I recommend hanging file pockets that are sealed on the sides so tiny receipts can’t escape. Spend a second writing on the receipt what it was for (include Schedule C category if you know it) to speed up sorting later.
See more information about Tax, Tax Planning and Tax Accountants.
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