Good Recordkeeping

A new year has started and tax season is over, and maybe it was a little more difficult to gather all your information than you would have liked.  Before we get too far into the year, read these tips to make sure you are practicing good record keeping habits so that next year will be a piece of cake!

  1. Keep records in one location- One of the struggles come tax time is that records get filed in many different locations and taxpayers spend lots of unnecessary time searching all the places they could have put that one piece of paper. Instead, when you receive a receipt or record that is commonly used for your taxes, make a copy and keep it in a tax file. Doing this will ensure that all your tax records are together and you can just hand the whole file over to your preparer. Common records to keep will include, but are not limited to, medical and charitable receipts, property tax and interest statements, or any statements with the words “Tax Document” printed on the envelope.
  2. Use Excel Worksheets- When taxpayers begin to gather lots of receipts or data for the year, a good practice is to begin to record these receipts on an Excel spreadsheet.  This way you will be able to make sure that every expense has been recorded without searching through hundreds of individual receipts.  This will also enable you to compute quick totals instead of adding each expense individually with a calculator, which could take a lot of time and mistakes are easily made.  A good example of an expense to record with Excel would be business miles.
  3. Take advantage of Personal or Business Financial Software- Many different types of software such as Quicken, NeatDesk, QuickBooks, and are available to help with personal financial needs in a range of prices from $0 to hundreds of dollars.  These kinds of software help to track and locate your finances using search features and other kinds of tracking options. Then come tax time, you can figure out exactly what you paid for deductable items such as vehicle registration fees.  They are also handy tools for budgeting and other personal finance needs.
  4. Create a System- Every person is different, some people prefer a fancy high tech computer to track everything, some love label makers and cubby holes, and some prefer a shoe box above all else.  Figure out what works for you and your lifestyle.
  5. Be Diligent- Good recordkeeping will save you money and stress in the long run.


For additional information check out this video from the IRS titled “Good Recordkeeping helps avoid headaches at tax time

Note: BHB Advisors is not affiliated with nor endorse any of the aforementioned software companies.

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