My Taxes Are Kicking My A$$…

And I haven’t even filed them yet! ;) I literally spent all weekend tracking down all my invoices and receipts and bank statements, etc etc etc. It was a mess. And after 8 hours I decided that it’ll never happen again, so I spent another 2-3 hours organizing and coming up with a better solution going forward in 2012 (though I am proud I got started on all this so early this year!).

It’s not the most innovative system in the world, but here it is:

  1. Print off all invoices and online receipts AS SOON AS I GET THEM before archiving in Gmail.
  2. Plop them all in a folder in my desk, and move on. (I got one of those old school writing desks which have these huge deep drawers, so I put in a ghetto filing system so all I have to do is reach over to the printer to grab the receipt, and then just plop it right into my drawer!)
  3. Put all other receipts from shopping in-store in the same folder. (One thing I am good at is keeping all receipts in my right front jean’s pocket, so every night before bed I can just take them out and put them in the right place.  Going strong now for 4 years and it hasn’t failed me once!)
  4. At the end of every month, record them all, and place them in my “2012 binder.”  Which will hold everything I ever need come tax-time.  And just in general – in case any joker companies try f’ing me over again. I’m literally going to 3-hole punch all invoices, and tape all receipts to a blank piece of paper so it’s all SUPER easily accessed when needed.  It’s a bit 3rd grade, but when I tried this before it worked well. Just matter of sticking to it :)

I’m pretty confident this will work.  And honestly, the last two months I’ve been doing something similar which was working out swimmingly – it was just the previous 8-10 months where I started slacking big time out there.  Pretty bad for a finance guy, huh?  I guess I care about my PERSONAL finances more than I do taxes and/or my companies ;)

Speaking of which, that was another reason it took me so long – I’m dealing with THREE entities here:

  1. The wife and I’s personal stuff
  2. My blogging company
  3. Love Drop company

And I still have more to do ;)  #1 and #2 can pretty much be checked off for now while we await all the paperwork companies and employers will be sending us and what not, but I still have a ways to go w/ Love Drop.  The one thing keeping me sane though is that I was ANAL about keeping EVERY SINGLE RECEIPT all year long. To the point Nate (the co-founder) would make fun of me every other day about it.  So we’re all good in this department, I just gotta put it all in one spot and make it nice and pretty for our accountant ;)

YES, I AM SPENDING THE MONEY AND HIRING OUR ACCOUNTANT AGAIN! I will never try and do all of this company stuff myself, I suck hardcore at details.  And they save me money *every year* by asking me good questions, and advising me every single month when I call them up with a stupid question (probably the best thing about having an accountant!  It’s in everyone’s best interest to be on the same page as it saves everyone time and money!).  Last year it cost us about $500 I believe to file for all 3 of those entities listed above.  I imagine it’ll be around the same this time, maybe a little more since new things keep popping up all the time.  But either way, it’s one of my favorite things to spend money on.  Can you imagine how long it would take me to file it all, *correctly*, if I can barely keep all my paperwork together? Haha… no way.

So the moral of the story today is don’t be like J. Money :)  While he’s smart in some areas, and always means well, he can definitely get scatterbrained and cause more unnecessary work for himself. If you don’t have a good record keeping system down right now, get on it as soon as you finish reading this!  Make 2012 the best year ever for accounting, and never stress out during tax season again.

What kinda systems work well for you guys? Anyone rockin’ it, or y’all in the same boat as I am? (I hope not! :))

——————–

PS:  I will add that I’ve been AWESOME at paying my quarterly taxes every 3 months though, to the tune of over $25,000 so far. So at least I won’t have any huge financial surprises come filing time – I just gotta reach that point before I go loony!

(Messy desk photo by WagsomeDog – not mine, but it sure looked like that)

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24 Comments

  1. KC @ PsychoMoney January 10, 2012 at 6:28 AM

    I think it costs 10 bucks a month but I use outright for each of my businesses. It is nice to be able to see what is going on with all the money at any given time and it makes tax time really easy for me.

    Reply
  2. Elle January 10, 2012 at 8:10 AM

    I started last year to use the print and folder system. Waiting to get my tax documents, so I’ll update you when we file to let know if it’s easier overall. so far it does seem less stressful as I know where all the paperwork for 2011 is at in our office.

    Hmm…if this system works, maybe I can write a post on that…. ;P

    Reply
  3. CeCe January 10, 2012 at 9:28 AM

    “ghetto filing system”?!

    Reply
  4. Stephanie January 10, 2012 at 9:29 AM

    I haven’t even started doing tax stuff yet. It’s usually not TOO bad. Usually 3 sources of W-2 income (2 are mine, one’s my husband’s), usually some 1099’s for my husband, and I do a Schedule C for my jewelry business. For that last one I usually do a good job of tracking income and expenses, and I save all my receipts, organized by month, in a folder… plus it’s just a little side gig, so we’re not dealing with huge numbers. But I HATE counting my ending inventory. It’s not so bad for finished products (I track that on my spreadsheet), but I’m low-tech with the raw materials and have to count everything by hand. Ick. :-P

    Oh, and I am totally on board with the ghetto filing system. I have a 2-drawer filing cabinet for all our bills, pay stubs, etc. Of course, I end up hanging on to them for WAY longer than I need to most of the time, but at least I know exactly where to find them. ;-)

    Reply
  5. J. Money January 10, 2012 at 10:00 AM

    @KC @ PsychoMoney – Well that’s good! How do you keep all your receipts/paperwork up to speed though? I’ve heard great things about Outright :)
    @Elle – Now you’re thinking ;) Even if it doesn’t work it’ll be an interesting read, hehe…
    @CeCe – Yeah, my own concoction of systems to get it done, over a “normal” one it seems people use.
    @Stephanie – Haha, there you go! I figured my plan of putting them all in binders at the end of each year would help keep things clean and give me a fresh start each time :) I’ll just have a bookshelf full of binders as the years go by!

    Reply
  6. bogofdebt January 10, 2012 at 10:03 AM

    I have a filofax folder that I adore. I actually need to buy a 2nd one. I hang onto a hard copy of my past year taxes and w2s and all my pay stubs until I can “file” (curently a second part of the filofax) those away–eventually I toss the taxes after the 7 years. The paystubs get rotated out each year. Thankfully, tax time is easy enough for me as I am only doing my taxes and once I get the w2’s I can get started on them.

    Reply
  7. Jeffrey January 10, 2012 at 10:07 AM

    I hate deal with physical paperwork, so I digitize all that I can and keep it filed the best I can on a computer. If it’s an expense with an email confirmation, I’ll make not of it in a spreadsheet I have going. I’ll admit I’m not 100% perfect at this, but I find it’s much less likely I’ll lose track of things this way.

    Reply
  8. Brian January 10, 2012 at 10:25 AM

    I have my big a$$ locked filing cabinet in the basement (my grandfather left it there, or should I say I left it there since it was bolted to the ground). I have 5 years worth of taxes in there. My filing system is pretty simple (W-2’s, 1099s, K-1s etc). When I am ready to destroy my old documents I take them to work and use the super sweet NSA approved crosscut shredder (they said it was ok to use).

    I have personally found the hardest part of being organized is the initial push to get organized. From there it is a lot easier to stay organized.

    Also $25000 in taxes?! Ouch!

    Reply
  9. Carrie - Careful Cents January 10, 2012 at 10:32 AM

    I’m a full blown believer in paying the “RIGHT” people to do a certain job. A half-ass accounting job can cost thousands (and tons of stress) just like a cheap plumber can ruin your whole plumbing system. Sometimes it’s worth the money to hire a good CPA, lawyer and etc. Although I am an accountant/bookkeeper and I know I’m good at my job :)

    I’m glad you’re getting everything organized this year, hopefully it will make next tax season much smoother for you. Also, have you tried the receipts tracker online/app called Lemon (lemon.com)? It might be useful for keeping track of receipts on the go – since I know you travel tons.

    Good luck in 2012!

    Reply
  10. SmartAssetTeam January 10, 2012 at 10:41 AM

    I cringe when I start to think about taxes! But I wouldn’t be so hard on yourself, in fact, I think you are setting a good example. You realize that things need some work and instead of getting discouraged, you have started implementing a system that should make things more efficient. We all need to recognize the fact that personal finance is about learning as you go, nobody is perfect from the get-go. So adaptability and creativity are what you need, and you seem to have both!

    Reply
  11. slug | sunkcostsareirrelevant.com January 10, 2012 at 11:34 AM

    I actually get excited about this time of the year. I’m really hoping to be zeroed out this time, but I always end up getting $ back. Income is too inconsistent year over year to try to optimize my witholdings. At least that’s what I tell myself.

    I TurboTax. It works well for me. I hired an accountant a year ago to check my work just to see, and there was nothing they could do to save me any more $. So, for the time being I’m doing it all myself.

    Reply
  12. retirebyforty January 10, 2012 at 11:47 AM

    I stuff all my receipts into a folder too. I guess I need to print out all my income as well, but I haven’t done that yet.
    I do my own tax, but will probably need to hire an accountant soon. Things are getting more and more complicated.

    Reply
  13. Robin January 10, 2012 at 12:19 PM

    Speaking of Love Drop…. did I miss that last post on the one in the midwest or has it not been posted yet?

    Reply
  14. Heather Stephens January 10, 2012 at 12:39 PM

    Hi J.

    It’s old fashioned but easy. I print and keep everything in an accordion file under my desk, categorized as to what type of expense it is: advertising, travel, trainings, etc. I also have a section each month in my day planner where I can track expenses and income. That helps me to stay on top of those automatic paypal subscriptions and such. :)

    I absolutely recommend hiring someone to do the taxes for you. They’ve always saved us more than it costs!

    Good luck! Way to go, getting moving on it so early!

    Heather

    Reply
  15. Robin January 10, 2012 at 5:32 PM

    Never mind! Saw the video online. Loved it. Brought tears to my eyes. Thanks for delivering everything and taping it. I was overwhelmed. Thanks.

    Reply
  16. Chris P January 10, 2012 at 7:39 PM

    If I can’t get an electronic bill/statement which is easy peasy to save, I scan everything, save it to my computer and back it up to my Seagate. Then I feed the original to my shredder. When you live in 850 square feet, you gotta save space!

    Reply
  17. cashflowmantra January 11, 2012 at 5:16 AM

    I have a separate file folder for each entity and immediately place the receipts that I need in those folders. After the year is over, I go and list them all on an Excel spreadsheet, and send that to the accountant along with the other information requested. The best money that I spend every year is to have my accountant take care of taxes. After about 2 weeks, I receive an 80-100 page booklet which include all my tax forms.

    Reply
  18. J. Money January 11, 2012 at 7:47 PM

    Oh man…. well, after another 7 hours organizing and categorizing Love Drop’s paperwork, it looks like I’m almost done! I have another hour or so to double check everything, and then wait for all the forms to be mailed and hit my inbox and all that, but other than that stuff I think we’re sitting pretty finally. Boy, what a mess…

    I can’t wait to post about 2012’s taxes though, and how much I’m gonna rock that $hit!! Haha… all a learning process, I guess ;)

    @bogofdebt – Nice. I haven’t ever tried filofaxes before, but if they’re what I’m thinking of I think they’re great ideas. And even more so holding on to all your tax stuff for 7 years – well done, my friend! Very smart.
    @Jeffrey – So you just scan in all phsyical receipts as you get them then? The part that scares me there is if your comp dies! Yikes. Maybe you’re good at backing stuff up though :)
    @Brian – Haha, I know – def. the hardest part is finding that system that works and getting started. After spending 5 more hours today on it (the Love Drop part) I’m pretty confident I’ll be motivated to stick to it… I can’t go through this pain again! (And yeah, only good thing about paying $25k in taxes is that I made a lot more ;) And as long as that keeps happening, I’ll be happy to keep paying more taxes!)
    @Carrie – Careful Cents – Thanks Carrie! No, have’t heard of Lemon before but I like the name :) I’ll check it out in a bit, once I post this. Keep up doing a great accounting job over there! That’s sexy ;)
    @SmartAssetTeam – Aww, thanks. Appreciate it :) I am glad that I can do that as well, but man – still sucky I have to learn the hard way a lot of times… and the only reason I started so early this year was cuz I knew it was gonna be a pain, and just wanted to get it done once and for all. Bleh… 2012 is gonna be a helluva lot better, you wait! :)
    @slug | sunkcostsareirrelevant.com – That’s a smart idea. If you think you’re doing well, and nothing major changes w/ your stuff, then great – keep it up, bro!
    @retirebyforty – Yup! It does get a bit more exciting though once you do *your* part, and then you’re waiting to see all the magic they do and what the final outcome is :) I like the surprise “final” numbers at the end… well, *surprise* only if it’s a good one! Haha…
    @Robin – Aww, good!! I’m glad you were able to find it – we decided to leave up the site mostly as-is until we work on Phase II… that way we can all check it out whenever and get happy :) Have a great weekend!
    @Heather Stephens – Thanks! And yup – no way I’m doing all these myself, I totally don’t trust myself at all w/ hardcore details, I’m more of a rough estimate kinda guy ;) Which is not good for this stuff, haha…
    @Chris P – Haha, nice! Is that because you’re a minimalist, or just cuz it’s cheaper to rent/own? :)
    @cashflowmantra – Haha, I know, right? It’s so awesome! That’s pretty much what took me 5 hours today too, going in and entering every single reciept into my spreadsheet – jeez… I think doing it once a month is gonna be MUCH much better going forward. I don’t mind mini spurts of 20 mins here and there, but there’s no way I’m doing that many hours again down the road. I learned my lesson! :)

    Reply
  19. Natalie @ Mango January 12, 2012 at 10:13 AM

    Hey J. Money, I’m right there with you. Tax season is that wonderful time of year where everyone seems to be perpetually grumpy, grumbling about filing taxes and numbers. Numbers! I thought I was done with numbers after college! Anyway, to take the edge off, we created a post at Mango that actually has some interesting information about taxes. I know– I thought it was impossible too! Check it out, it might make you smile! :o) http://www.mangomoney.com/blog/news-insights/10-things-you-never-knew-about-taxes

    Reply
  20. J. Money January 12, 2012 at 6:54 PM

    “Peter the Great in Russia once taxed beards on all men except for peasants and priests.” – Hah! I’d be in trouble there – just started growing my beard for the first time in my life ;) 3 weeks strong so far! haha…

    Also, I may copy your post come tax time – those are some interesting facts! (I’ll of course credit y’all back ;))

    Reply
  21. Leigh January 28, 2012 at 2:09 PM

    Instead of just archiving useful documents for taxes in gmail, why not add an “incometaxes” label and star them AND THEN archive the email? That’s what I do for charitable donations, even though I don’t have enough to itemize this year. Next year, however, that will be more useful since I will have mortgage interest to itemize!

    You could even use sub-labels, say:
    1) incometaxes/personal
    2) incometaxes/blogging
    3) incometaxes/lovedrop

    And then you would have separate records for each of these entities!

    Reply
  22. J. Money January 28, 2012 at 9:19 PM

    True indeed, my friend! Though now I print them off first and *then* I archive away. And usually don’t have to go back looking for them :) But it would be smart to label them as well just in case I ever need to – I appreciate the tip! And you’re right – you’ll have a lot more to write up once you own :)

    Reply
  23. MoeyRo March 22, 2012 at 11:18 PM

    As an x-IRS auditor Thank God your keeping actual receipts. IRS loves it when u don’t have physical records. They don’t take digital records and God forbid you didn’t back up somewhere reliable.

    Reply
  24. J. Money March 23, 2012 at 8:13 AM

    Hah! I bet they do ;) I’m ready to go if they shall come knocking! (Though I REALLY really hope they don’t – it sounds like a horrific process).

    Reply

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