Eye on Business | Taxes. A Four Letter Word.

Yes, I know “taxes” is actually a five letter word. But it certainly FEELS like a four letter word, doesn’t it? Shivers.

I just dread tax time. You too?

Let me set the stage of tax time in our world.

Aug-Dec:  Busy season… the pile of invoices, bank statements, post its, ordering notes, M&M wrappers, protein bar wrappers and folders has grown rapidly. My excuse: 3 kids, 2 jobs, house renovation, and running a business leaves no time for paperwork. <–the lie I tell myself so I can sleep better at night

Jan 1, 12:01 a.m. -Husband: “Is your business information prepped for taxes?”

Me: Ignore. I pretend to care what Ryan Seacrest is saying. And I can’t believe my husband was thinking about taxes during our new year’s kiss.

Jan 2-Jan 10th  Approximately 5 p.m. each day –

Husband: “Is your business information prepped for taxes?”

Me: Ignore. Procrastinate. Give evil, mimicking looks behind his back. You know, the mature way to handle it.

Jan 11th      Husband: “Is your business information prepped for taxes?”

Me: “I can’t believe you waited this long to remind me. I’m on it!” Part of that is a lie.

Well, three days and many pots of coffee (laced with Bailey’s) later, I’m ready for the dreaded tax appointment. And I’m mad. And I’m disappointed in my organizational skills. I’m tired of feeding myself lame excuses that the paperwork isn’t as important as taking great photos and selling them.

It is every bit as important.

It is with great joy that I can say that I am not only prepared early this year (early for me), but I’m pre-prepared for next year.

I thought I would share some of the steps I’m taking to prevent tax time anxiety (and promote marital bliss) in the years to come. Here are some tips that might help you, my fellow paperwork -hating friends:

1) Talk to your accountant at least once throughout the year. June or July is a great time because your accountant is less busy post tax season. You are also mid-year with your book keeping and can make sure you’re on the right track for end of the year filing. You may be required to pay estimated taxes and you will need vouchers to do so. Your accountant can prepare these for you. The last estimated tax payment for 2013 is due January 15, 2014. HERE is a link to some helpful information about estimated taxes. Basically, if you’re profitable, you need pay estimated taxes throughout the year.

2) Keep an updated list of photography equipment that you use. Include a purchase date with each item.

3) Keep a mileage log throughout the year. Did you know that even trips to the store for business items can be logged? These miles really add up to big savings on your tax return! There are plenty of apps to use for this. As of recent, you may need a 3rd party to verify the miles used on your car for business. Your accountant can provide more information on this.

4) Copy checks before making a bank deposit. Be sure to note if cash was deposited and which client paid the cash. Note the date of the deposit on the copy of checks so you can easily match deposits to statements.

5) Pre-make folders for each month of the new year. Print a summary label for the front of each folder (sales, tax paid, expense total, etc.). During the month, drop anything of financial significance into the current month’s folder: lab invoices, client invoice copies, bank statements, credit card statements, etc…

6) Wait until all statements for the month have arrived and then update books once a month. This would probably be mid-month. Set a date and make it a routine. Make it your payday!

a. Attach receipts/invoices to credit card statements. Make sure all charges are accounted for with an accompanying receipt. NEVER use a personal credit card for business purposes or vice versa. Keep business and personal financial transactions and accounts completely separate!

b. Make sure there is a client invoice for every manual deposit, Square or Paypal deposit. Attach these invoices to the bank statement.

c. Enter information into your bookkeeping program (we use Excel). When entering expenditures, use codes to categorize expenses. For example, “props”, “marketing”… The breakdown summary of this expense information will be eye opening!

d. Pay sales tax monthly. This is my opinion, but there is less room for error if you pay monthly versus twice/year.

e. Pay yourself! You’ve earned it!

Now I’m off to boast to my husband that I’m ready for our tax appointment and he only had to ask me once this year! That’s my story…and I’m sticking to it.

Come say hello at JPBP! Do you have some great organizational tips to share? Head back to this SSG post and tell us!

Jodee 🙂