I love being organized. I have type A tendencies, but also a little bit of a type B soul, which tends to work really well for me in business! And, my accountant appreciates the level of organization I have! So, I thought since we’re in tax season now, I’d share a bit about what I do to prepare for my tax returns!
*Please note that I’m not an expert by any means and I’m only sharing my personal experiences and approach!*
I use Sprout Studio to track and record all my expenses and income throughout the year. I ALSO keep a finance binder where I record my income and expenses with their appropriate receipts. For each month I simply have an “Income” sheet, which is like a data table with blank spaces for the date, the amount, the type of order it was, and where the money came from. I have an almost identical tracking sheet that I use for “Expenses” but I just include the date, the amount and where it was spent.
Within Sprout Studio, when I do my monthly accounting (I just enter in my expenses, my income is automatically recorded and tracked!) I assign each expense to a category in my business.
At the end of the year, I download the .csv file from Sprout and then do a bunch of extra organization in Excel! Here are the spreadsheets I create:
- An overview sheet // This is where I put the yearly totals for: income, expenses, mileage, and then the totals by category! This year I included a pie chart, because I was feeling extra nerdy and was excited to have a visual!
- Income sheet // I organize the sheet from oldest to newest before I print it.
- Expense sheet // The same as the income sheet, but now it’s just expenses.
- Expense sheet by category // I take the entire sheet and organize it by category! Between each category I leave spaces so it’s visually easy to see when it changes category, and then I included the totals for each category!
There’s a few more things that I have to take care of in terms of spreadsheets, but that’s because we have a rental property in Maine, and I am an independent contractor for VIPKID. This year, since I’m in MA, I’m only sending the final spreadsheets and all my supporting documents (W2s, insurance verifications, 1099s, etc.) in a packet to my accountant. In years past I tuck in all the final spreadsheets right into my finance binder for my business and drop the whole thing off!
This whole end of year tax prep takes me about an hour to do, maybe a little less. The reason I’m able to do this so quickly is because I update my income and expenses MONTHLY so that way I’m always on top of it and not falling behind! That’s basically the best piece of advice I could give to any business owner – do it each month of the year instead of waiting until the very end of the year to track all your income and expenses!!
Also, here are two blog posts that I’ve written in the past about how I handle my business finances and who I use for accounting!
Why Having an Accountant Changed My Life.
I hope that this can be helpful to someone today!
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