Is your paperwork costing you time and money?
I know there’s not a single FSw reader who’s going to call up their friends after this and say, “Dude, I just read a fantastic post on paperwork!” It’s also December, twelve months too late for this tax/paperwork tip to actually do you any good.
But luckily there’s another year where this one came from, and hopefully this will make things easier next time around.
Throughout the year I do my bills, invoicing and other paperwork every week. Sometimes I forget and sometimes I have a lousy week where there’s no paperwork to do. But about 90% of the time I do my paperwork every single Friday.
When you keep your paperwork fresh and current like this it takes about two minutes a week. All your current receipts and invoices are right there on the top of the pile, fresh in your purse or wallet, or near the top of your email inbox. Enter their numbers into a spreadsheet, file them behind last week’s papers and you’re done.
How it saves time
Spending a minute or two on paperwork each week is much less time consuming than waiting until annual tax time.
Let’s say it takes 5 minutes to get your paperwork in order every week.
(Caution: complex mathematical formula coming up)
5 minutes per week x 52 work weeks = 260 minutes.
So over an entire year you’d spend just over 4 hours on invoices and such. Not bad. When’s the last time you spent 4 hours preparing for and doing taxes?
What happens if you wait until tax time to do all this? First you have to find 52 weeks’ worth of papers, receipts, PayPal fund notifications, etc. This step in itself is highly unlikely and alone could take hours. Then you have to try to remember if that random lunch receipt you found was a tax-deductible business lunch or not. Then you have to enter all the numbers into a spreadsheet, add it all up, put it in chronological order if you or your CPA prefer it that way, etc.
Sound fun? Nah.
How it saves money
Remember you work at home folks that a lot of your daily life is tax deductible. Stuff like business lunches, printer cartridges and other business purchases can be deducted and save you quite a bit of money. You can also usually deduct a portion of your rent, phone, utilities and even internet bills.
If you keep up to date on your paperwork you’ll never lose another one of these valid tax deductions. You’ll never forget the business lunch you had with Bob back in early January or where the receipt for it is.
And if you’re current on all your paperwork there’s no reason you can’t do your own taxes, unless they’re complicated by other assets/liabilities. Believe me, everything is very clean and orderly come tax time if you’ve kept up with it over the year. And if you decide to hire a CPA anyway you’ll still save money because:
- You’ll still have all those valid deductions for him to file
- Everything will already be insanely organized and you just hand it all over
- If he’s paid hourly (like mine was), he won’t have to charge you for time spent figuring out your mess (like mine did)
I hope you find this useful for coming year. It may take some getting used to, but before long you may start to enjoy the organization and even find it keeps your space cleaner.
If you’ve got tax/paperwork tips of your own let’s hear them!