Thursday, March 15, 2007

it's tax time

For too many weeks now, I've been putting off the inevitable. I need to start working on my 2006 income tax return.

(Yes, even organizers can procrastinate - although you will notice it's still only the middle of March. Some procrastination, eh?)

For me (and others who are self-employed), the biggest chore is keeping track of my expenses. I have no trouble saving receipts - everything (and I mean EVERYTHING) gets cleaned out of my wallet every day or two, and stashed in a file in one of my filing cabinets. If the purchases on individual receipts are not clearly itemized, I try to make notes directly on the receipts before I put things away, so that I'll remember the purchases later.

Periodically (ideally once a month, when I reconcile my bank statements), I weed through the receipts and pull out anything that pertains to my businesses. I then sort them by category, intentionally mirroring Revenue Canada's Statement of Business Activities. This makes it easier to fill out the form at tax time.

As I mentioned above, I put everything in a file in a filing cabinet. I know people who have also had a lot of success with a memo spike (see the image at the beginning of this post) - it keeps the receipts in reverse chronological order, and prevents them from slipping and sliding around.

And don't laugh, but the proverbial shoe box is also a great alternative, especially if you have a lot of receipts that would take up too much room in a file. There are plenty of organizing boxes on the market - pretty photo or video storage boxes, or various plastic boxes with lids. You might even want to keep two boxes: one for receipts as you get them, and another for receipts that have already been itemized.

At tax time, I double-check each receipt against its expense list (I keep a separate spreadsheet for each category), and then tabulate them all in another spreadsheet I've created that's laid out exactly like the Statement of Business Activities.

Am I too organized for my own good, or what?

So why do I procrastinate? It's still a chore. And sometimes life intervenes, and I don't get the spreadsheets completed every month. That means inputting several months' receipts all at once, which can take a couple of hours.

(And then yesterday night the mouse on my old computer, where I keep all my financial records, froze. I'm starting to input everything into the new computer - which is another several hours' work.

Need I say more?)

copyright 2007, Michelle Lynne Goodfellow

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