Gearing Up For Tax Filing

Nichelle Stephens is the founder of Keeping Nickels.

Income Tax deadline is two weeks away!

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. Make sure you have the W-2s
and 1099s for the work/services performed as well.

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 option
for 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 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.

Now, open your eyes and get ready for some deep navel gazing at your finances, but don't forget to breathe. :)