The end of the year is almost upon us; have you begun preparation to file your taxes as of yet? Are you guilty of “shoebox accounting?” Many small businesses find it convenient to throw all of their receipts and documents into a shoebox, but this doesn’t necessarily mean shoebox accounting is wrong. In fact, if done properly, shoebox accounting can be quite helpful to an accountant. Here are some tips on keeping your shoebox organized.
- Compile your credit card statements. If all of your necessary expenses were paid with a credit card, ensure that you have all of your receipts in one place. If you have copies of the original receipts, staple them to the credit card statement.
- Categorize your receipts. For those who do not use credit cards exclusively for business expenses, make sure you have all of the receipts and categorize them into files such as travel, food, entertainment, equipment, office supplies; anything that makes sense. For example, if you did not travel during 2013 for business, it does not make sense to create a travel category.
- Add notes. Anything that gives your accountant more background or information regarding your spending can be helpful. You can note that one entry on your credit card was for personal reasons, or that the equipment you purchased in June was exchanged for a newer model in August.
- Make a list, check it twice. Santa’s not the only one who needs to double check lists; go through all of your correspondence and ensure that you have records of all the purchases you made during the year, and all of the expenses as well. This includes travel for business, entertaining of clients, anything that you spent money on that was beneficial to your business. Key items many people forget are advertising (including anything on-line); gas for travel to client meetings, etc.; and of course, office supplies. Everything adds up and it is essential that you gather everything together .
- Ask your accountant. If you are ever in any doubt as to what you need to include in your shoebox, feel free to ask your accountant. Depending on your business, they will be able to make more specific suggestions as to what to include in your shoebox, and may have a format to follow. Your accountant is there to help you, and anything that makes their job easier is of benefit to them as well.
Tax season may be looming, but it doesn’t need to be stressful. As long as you have all the necessary information for your accountant to use, it will be a breeze. Getting started early on compiling all of your information is an excellent idea as well, which will allow you to do the legwork needed to find anything you do not have easily accessible. Preparation is key to surviving the tax season in a calm, relaxing way.