Sara Orellana
Tax season is upon us! And whether you do your taxes yourself or work with a CPA, accountant or bookkeeper, we are all facing one daunting task: organizing files. We know organization is key, and having a well-designed system makes tax season as easy as possible on everyone involved.
Full disclaimer: I am not an accountant, CPA or tax professional. I offer practical solutions and tips to help business owners and entrepreneurs through this season and their day-to-day operations.
I will always remember my first nonprofit audit. Nonprofits typically have a third party audit their financial records on an annual basis, resulting in a full report and the filing of their annual tax report. These two processes do not need to be completed simultaneously; they just seem to line up. As a brand new CEO who had inherited a nonprofit with little to no structure, the experience was as painful for the auditor as well as myself, but it was also one of the best learning experiences of my life.
Most of what I learned is common sense and I should have known. But we all know that when we are running an organization, we are serving in the role of three different employees and are pulled in 15 different directions. Let me share a few lessons I learned and have implemented in nonprofits and for-profits over the past five years.
Devote five minutes every day to filing
In the list of things we need to do, filing seems like the last area to focus on. But when we work in organized areas, our stress levels are lower, we are more productive and generally happier. My tip: Use the random 5 or 10 minutes throughout the day to file. And on the really hectic day, use the last 15 minutes of your day to file.
Organize your files
Create a filing system and follow it. Determine how you will create files, either by client name or business name. Create new files each year, or clip the prior year’s files together. Place all documents in a particular order, meaning, new files to the front or to the back. Take the time now to design and implement your system.
Scan important
documents as you go
Rather than waiting until the end of the year to scan documents, spend 30 minutes each week scanning, naming the files, and organizing them in a digital file for the coming tax year. Each month, as you review your financial statements, place copies – digital or paper – in your tax folders. An hour spent every month will make things easier for both you and your accountant.
Create a list of questions, notes, and important information throughout the year
Keep a running list of questions, points, notes, and important information for your accountant. Write them down as they occur to you. Spend 30 minutes at the end of the year editing your list.
There is no reason to dread tax season if we invest a little bit of time throughout the year. Tax season could actually be fun. Well, maybe not fun, but how about a little less painful?
Let’s talk about it
Everyone has their own organizational practices. What are some tips that have helped you along the way? Send me an email. I’ll also gladly answer any related questions.
Sara Orellana, MS, MPH is an independent entrepreneur who specializes in strategic planning, leadership, and grant writing. She can be reached at sara@3raptorconsulting.com.