Taxes are always a pain to deal with so most of us avoid it. However, sticking your head in the sand and ignoring your taxes doesn’t make them go away. In fact, ignoring them make the whole process infinitely more painful. Take some simple steps to minimize the pain. Life will be more enjoyable on April 15th if you do.
It’s not uncommon for people to avoid their taxes and think it is only a once a year chore. This is not prudent to ignore them and putting them off till only once a year increases the pain of this chore exponentially. Recently, this lesson was driven home. A mistake was made on our taxes for our estimated quarterly payment. In fact, the error wasn’t even caught by our accountant. We caught the mistake. It is a huge error to leave all the responsibility up to your accountant. They are human and make mistakes. Had we been more proactive about preparing our taxes and not left all the responsibility to a third party then this probably wouldn’t have happened.
By ignoring our taxes and leaving all the responsibility to our accountant was how we got into this trap. But once the mistake was found then an intense effort to get caught up and rectify the problem was underway.
We began by taking some very appropriate and basic advice. Do your taxes all year long. A very dear friend told me how she organized her taxes for her family. They were self employed as both my husband and myself are also. She got the biggest three ring notebook she could find, dividers, a highlighter, calculator, stapler, a three hole punch and labels. She advised that every bill that came in to three hole punch it and put it in the binder under it’s appropriate category. I organized our binder with the following categories according to it’s ability to be deducted:
Pay Check Stubs
Rent and Utilities
Cell Phone Bills
If a receipt or anything that needed to go into the binder did not fit, it would get stapled to a letter size piece of printer paper, the applicable date written with the amount to be deducted also written out and the corresponding amount on the receipt highlighted. It would then get three hole punched and added to the binder under the appropriate heading. You get the idea and your accountant will love you for it!!
This not only works for your taxes but is excellent to organize your non-taxable expenses. I had the second binder organized for vet bills, credit card purchases that didn’t apply to taxes, etc. This way I knew where the money was going. I also was able to keep up with such things as when the dogs had last seen the vet and what shots were coming up.
Once this is organized it is easy to keep up on a daily basis. Then, almost like magic, a budget seems to show itself to you. You don’t have to sit down and wrack your brain to try and remember what payments are coming in and when. It’s all right there in front of you.
It also serves to minimize the dread and fear that builds up for the awful April 15th deadline. Now you can sit back, enjoy a movie and just send off the check.