You did it again. It’s tax season and you don’t have your business expenses from last year organized.
I know. I know. You are too busy marketing and managing your current clients and customers.
And keeping up with a bunch of receipts and ALLLLLLLLL of last year’s business expenses you had in via
- your paper receipts that are scattered everywhere
- your 10 online accounts that each have $100 of sales
- your own personal checking account which is a “no-no” but who can deal with opening one with such a pitiful amount
- your 5 credit cards – because nothing like borrowing from everyone.
It’s a pain!! Why do you do it?
This is not a lecture on you on what you “should” do. There are plenty of resources to help you set up an ideal system. However, I will suggest that you take a good hard look at why it’s a struggle for you every year to organize your expenses.
And don’t give me “I’m not good with money”. There are too many tools – from hiring bookkeepers to smartphone apps – that can help you and as an entrepreneur, you need to understand your business expenses and profit.
So I’m guessing that you don’t want to deal with the state of your business finances. You know if you look at how much you are earning in comparison to how much you are spending – there might be some pain. Some #s that tell the true story.
Well you can’t solve what you won’t look. So I suggest take a moment after you have dealt with your expenses this year – and start to reallllllly examine everything.
Deal with last year’s “Expenses Hot Mess”
In the interim, let me give you a three step plan to deal with this year’s “hot mess”
1. Get help
Rather than troll through the impossible by yourself, get help. Get recommendations for a bookkeeper to help you organize and find an accountant to do your taxes. (If you send everything to an accountant without organizing everything, you’ll pay twice as much).
Yes, it’s going to cost you to get help. But it’s going to cost you EVEN more if you try to do this all on your own. You need someone who is not attached to the process and can help you speed through everything. Plus you need someone who is better educated in this area – what counts that you are forgetting? (yayyy!) And what doesn’t count? (at least there is no embarrassment later on!)
2. Set a date to FIND all of your receipts and statements
Go through all of your paper receipts as well as your monthly statements. But don’t worry about organizing them just yet. Dump them into one space first. As you start putting your hands on the receipts from the last few months, it becomes very tempting to want to organize them all. Don’t. Just get them all in one space.
Give yourself a firm deadline to gather everything – Jan 20th is ideal. Don’t give yourself too long – 5-10 days max to get all of your winter, fall, summer and spring 2012 papers together. (And yes, I went in that order because it’s likely that’s how you’ll find everything)
3. Scan it
So either spend a weekend holed up scanning or find someone to help you slog through everything. If you want, you can buy a good scanner and do it yourself. But trust me, you’re going to need to block off time at least a weekend.
Once you’ve scanned everything, then you can organize it. It’s alot easier to do it this way rather than as you find each individual slip of paper.
The one I use and LOVE is Fujitsu Snap Scan. I purchased one a few years ago. Expensive? Yes. But the quality was well worth it. And the speed – it paid for itself in a short time. (And no they are not paying me to say this! lol)
Another one I’ve heard great things about is Neatdesk. They have both a portable and desktop version
You can also send it to companies who will do the scanning for you – Shoeboxed.com is one example. You send them your receipts, they scan them for you and categorize them (nice!) and it will be saved in the wonderful virtual cloud for you and your accountant to access
4. Face the Numbers
At this point you are ready to talk with your accountant. No it’s not the perfect system that would help you get a real handle on your expenses. But it is a better place to start than dumping the shopping bag full of receipts on his/her desk.
And I’ll recommend that once you get this system organized you start to set up systems that will help you stay better organized for next year.
Three simple ones that you can do over a weekend:
1. Set up a business checking account. And use it for the business ONLY.
2. Designate one of your credit cards as business ONLY
3. Download an app that will allow you scan your business receipts on the go. Much easier as you go along.
Let me know your thoughts, concerns, and ideas below. What do you struggle with in this area? And remember – no judgment on my part!!