It’s almost everyone’s favorite time of year: tax time. It’s something we can’t avoid, so I’m here to help you make this process less stressful by following these five steps.
1. Organize your receipts
The following two systems for organizing receipts are great on their own, or you could do a combination of them.
Envelope System: This system is great for when you get home from a client meeting (or several) and pull out a bunch of receipts from your purse. Instead of losing the receipts, toss them into a folder or envelope labeled with the current month. As you finish your monthly bookkeeping, you can grab the envelope for the month you’re working as questions come up.
Paperless System: If you don’t like having a lot of papers around, going paperless with your receipts would be a great option. Expensify and ShoeBoxed are two great paid options that will help organize your receipts. If you’re looking for a free option, check out Evernote. You can upload pictures or scans of receipts to Evernote and make notes about them in the program.
2. Finish bookkeeping
Put a date on your calendar that you plan to finish up your bookkeeping for the year. If you need a little extra motivation or just some quiet time, pack everything up and head to the nearest coffee shop. If you feel completely overwhelmed and aren’t sure where to start, don’t be afraid to reach out to a bookkeeper. Many offer support if you don’t want to or can’t afford to hand it all over to them.
3. Tally up miles driven for business
All of those miles you drove to client meetings, site visits, rehearsals and weddings can add up fast and give you a pretty nice tax deduction. To take the business mileage deduction, you can use an app like TripLog, keep a notebook in your car or keep notes on your calendar and add them up at tax time. Whatever method you choose, make sure you track the following information:
- Starting location
- Ending location
- Round trip miles (can calculate with Google Maps)
- Short description of meeting purpose and client
4. Submit 1099s for contractors, W-2s for employees
If you’ve hired employees or contractors, January is the time to get their W-2s or 1099s filed. Your payroll company will help create and distribute the W-2s. If you paid a contractor $600 or more for services throughout the year, you’ll need to issue them a 1099 by January 31. You can file these yourself using a program like 1099online, or you can reach out to your accountant and have them create and file the forms. To collect the information needed on the 1099, you will need to send the contractor a W-9 form to fill out. These can be sent as early as when you first agree to work with the contractor and definitely shouldn’t wait until the last minute.
5. File tax return by deadline
These deadlines can creep up on everyone, especially as you’re gearing up for wedding season. Put them on your calendar along with a reminder set for a month or two before so that you aren’t rushing last minute to get them filed. Many accountants will also have their own deadlines for receiving information, so be sure to check with them for their due dates.
- Sole proprietors — due April 15 (includes single-member LLCs)
- Partnerships — due March 15 (previously April 15)
- S-Corporations — due March 15
Now that you have the tools to make the upcoming tax time less stressful, put each step into practice. If you need to hire an accountant for your tax preparation, don’t put this off until the last minute. Start contacting accountants as soon as possible, before they get into their busy season, to see if they would be a good fit for your business.