Monday is April 18th. It’s the last tax day to file your 2015 tax return. If you haven’t already you should have filed for an extension. As an entrepreneur you have to make sure you are on top of everything when it come to your taxes.
You do not have an employer who automatically deducts your taxes from your income. Therefore you, need to pay estimated taxes throughout the year, in addition to doing your tax return. Be sure to speak with your tax professional to understand what are the requirements for your particular situation.
I created a system for myself which including making sure that I have both physical and digital copies for everything. In additional to that I use an excel spreadsheet to help me make sense of all of the numbers.
My organizational system
For my physical copies I use your standard file folders. There’s a total of 10: 2 for each quarter (income and expenses), 1 for my Income/Expense Report (my excel spreadsheet) and one for tax related documents. They are all keep together by a larger binder clip.
For my digital files, I created a master business folder. It has more folders within it but they are all empty. So every year, I just make a copy of that folder, title it with the current year and start adding the documents. Here’s how that is laid out.
Business Folder Master
- Bank Statements
- Design Software
- Domain Names
- PayPal Fees
- Project Management
- Stock Photography
- Web Hosting
- Q1 Jan – Mar
- Q2 Apr – June
- Q3 Jul – Sept
- Q4 Oct – Dec
- Tax Documents
Every month I set aside one day to gather all of my documents, create both the physical and digital product as well as adding the numbers into my spreadsheet.
So why is this techie using a non-technical method?
Well I start using the excel spreadsheet because my Tax Professional asked me to, I guess to help her (and myself) to understand my business better. From there having both a physical and digital copies of everything just felt natural.
There are apps you can use. I used to an online tool called Outright, they have since be purchase by GoDaddy and renamed to GoDaddy Bookkeeping. I absolutely loved the tool. I could connect it to my PayPal account and all my income and expenses were gathered there.
I could create charts to understand how I earning money and how I was spending it. It also created my schedule C form for me. After GoDaddy took over, I decide to stick with my paper/digital set up.
I’ve have thought about starting an account again but I’m not sure if its worth the expense at the moment. I also used Shoebox to scan and organized all my receipts, bills, and other documents.
Although I use the free version I thought to myself I could just use my Dropbox account (affiliate link). No need for another tool there. What I have learned is that sometimes you need technology to create a streamline system and other times you need to go old school.