Income Tax deadline is two weeks away! This year is it very important to file your income taxes on time since then will be eligible for the economic stimulus check.
If you are getting organized for tax filing, don’t get stressed out! Keep it simple. Close your eyes and think of a wave on a beach. Your money is a wave, and you have to keep
track of inflows (income) and outflows (expenses).
The money you earn is income. That will come from sales income from
your business, paycheck from a job, or payment for services you
performed. Unless you stuff all your money under a mattress (I don’t
judge), then all your income has been deposited into one of your bank
accounts. First,make sure you have all the W-2s and 1099s for the work/services
performed in 2007.
For income taxes, the focus is more or your outflows, since deductible expenses reduce your taxable income so that you get a refund or pay less back to the government.
Your money is coming out of four main places: business bank accounts, business credit cards,
cash, or personal accounts. Get an inventory of what statements you have and then contact your bank to get if statements are missing. [You may be able to download statements, but for some banks, snail mail is the only optionfor bank/credit card statements older than six months.]
Here’s a basic checklist of what you will need.
Bank Accounts: Collect bank statements from your business checking
account from last year. You will need January 2008 if your December
bank statement doesn’t include through December 31, 2007.
Credit Card: Gather all credit card statements business account from
last year. You will need January 2008 if your December statement
doesn’t include through December 31, 2007.
Cash Receipts: Collect all CASH receipts (taxi, lunch, delivery).
If you have not already done so, separate the business receipts from
the personal receipts. Your CPA will love you for that! Separate the
cash receipts from credit/debit receipts. If you paid via credit card
or debit card, then it is already listed on a monthly statement. Going
forward, try to pay for most business-related via debit or credit card
so those pesky little receipts don’t pile up. [BTW, Shoeboxed is a new service that will scan receipts and export into Quicken.]
Personal: If you made purchases or paid business/deductible expenses via a personal checking or personal credit card, then go through your personal statements and check off every business expense so that they can be included as deductible expenses.
If you’re in doubt about whether something is deductible business expense, you can look at the Schedule C for the general categories or ask you CPA. If you doing taxes yourself, then check out Turbo Tax or H&R Block Tax Cut software.
Now, open your eyes and get ready for some deep navel gazing at your finances, but don’t forget to breathe. 🙂