The first time I met with my small business Nashville accountant, I realized how unprepared I was. I walked in the door with nothing but myself. The accountant started asking me for different documentation that I didn’t have, and honestly had no idea where I had put them. It took me weeks to finally locate most of it and some of it I came up empty handed. It was at that moment that my accountant sat me down for a very serious talk about how to properly care for my tax information.
First he went over everything that I was able to write off on my taxes. Then he showed me a few cool apps that I could download on my phone in order to take pictures of receipts. This was really helpful because a few of the receipts I did locate were so old you could no longer read the writing on them. He recommended that I keep as many hard copies as I could, but it was always better to have something rather than nothing. The apps also made it easy to turn my receipts into a PDF file, so I could print them if I needed them and they were a file and not just a picture.
The next thing my accountant recommended was that I start contributing more money to my retirement funds. He noticed that I barely contributed to my 401K and that I had never even started a Roth IRA. This would not only help me in the future, but it is beneficial during tax time.
We came up with a safe number for me to contribute and I’m so happy he talked me into it. There were a few other areas that I contributed to such as my savings, and I made the pad I have for when taxes are due larger, just in case.
He also told me to go out and buy a filing cabinet. While most of the information could easily be stored online, he said that shoeboxes just weren’t the way to keep hard copies. He said I should keep the hardcopies for about five to seven years, and then I was free to get rid of them. By having them safely stored in a locked file cabinet, I was better off for safety reasons and I would be more organized for next year.
After exploring my budget and how much extra money I had left over from the previous year, my accountant said the best thing I could do was hire a bookkeeper for the year. He said I did not have to put one on my staff, but could easily benefit by hiring one to work part-time. This would eliminate all of the lost receipts and missed write-offs because I didn’t know that I could. I took the advice of my accountant and this year I have hired my first bookkeeper, and my accountant couldn’t be happier. He knows that next years taxes will be much easier, and I’m thrilled because I won’t have to stress about it when I can’t find a receipt from a year ago.