Most people don’t like to spend money that they don’t have to. There is one group of people who always spend at least double on tax preparation services that they don’t need to. I call these people suitcase accountants. Some know this as the shoe-box method of accounting.
Essentially if you put all your receipts in a box or suitcase then hand those to your accountant, your accountant will then be spending about twice the amount of time it would have taken you to sort through the box in the first place. The reason it takes longer is that you know your business better than anyone else. You know that when you bought a new lock it was for the office not one of your rental properties but your accountant won’t know that.
So how do you keep track of all this – first I recommend that you use a software program such as QuickBooks. If you are trying to get all the info together now for last year here is the fastest way to do that without using accounting software.
- Sort all receipts into piles by what they were for – in other words all office supplies together, all utilities together. If you have several years of receipts mixed up sort by year also.
- Add them up and put them in an excel spreadsheet or list them on a sheet of paper
- Get with your CPA to help you find a good virtual bookkeeper who can keep you up to date from this forward
If you are using accounting software such as QuickBooks the fastest way to get your information together for your accountant is to keep up with it on a weekly or at least monthly basis but if you waited all year then here is the steps to take
- For training on QuickBooks go to our training sight www.solidrockbootcamp.com
- Download all transactions from your bank
- Reconcile all bank accounts
- Reconcile all credit cards
- Put together a list of all cash transactions or those items you paid for your business with your personal credit cards or bank accounts (give this to your accountant with your file from the accounting software
See that was not near as hard as you thought it would be and now you are caught up. Now schedule your tax appointment and put about an hour each week into your schedule to keep up with your accounting so you don’t have this same issue next year.