That’s probably why it took me so long to get a system together for my tax planning and management.
I was just never prepared, those important dates always snuck up on me, and the last 24 hours before a deadline were always a mad, stressful rush to get everything together and checked.
So, as we’re fast approaching THAT time of year again, I thought I’d share with you a few tips from my now very organised, system that may help ease the stress for you, both heading towards the coming deadline, and on into next year.
- Keep it all in one place.
This may seem incredibly obvious, but how often have you found yourself going through piles of paper looking for that elusive share dividend or bank interest statement?
If you only do one thing, this is it. Admittedly if all you do is this, you’ll end up with a disorganised mess of paper, but that’s a huge step forward from losing something and having to chase your bank for example, to get a duplicate.
Grab yourself a couple of box files, or set up two new files in your filing cabinet, and put everything relating to your personal tax in one, and everything relating to your business tax in another. If you are VAT registered, you’ll want a third file just for that.
- Take time every month to sort.
For personal tax, the best idea here is to sort your information under the same headings as your tax return. As a minimum sort the information into the basic categories. If you have a lot of one particular thing, maybe shares, then sort that section into sub-categories.
Keep your expenses and your mileage logs (I use Xero and the Tripcatcher app to log mine) up to date on a monthly basis too.
- The ‘not sure’ pile.
There may be things you get through the post that you just aren’t sure about. Do they need filing or don’t they? Keep anything that you’re not sure about in one place to review with your accountant.
- Create a summary sheet for each section.
This is a life-saver that can be used year after year.
For each section of your file which, remember, correlates to a section of your tax return, create a summary sheet that lists all of the information that is relevant to that section, and therefore should be present.
So for example, you may list your bank accounts, the date each was opened, the date any were closed if it falls in the last couple of years, the dates of any interest payments, the gross and net figures, any notes relevant to each account.
I’d recommend that you create these summary sheets in consultation with your accountant to make sure that they contain all of the relevant and necessary information.
Then month after month throughout the year simply update them. Having been created once, they will then become a great at-a-glance reminder of the information you should be gathering on a monthly basis, and make your life so much simpler!
- What’s missing?
When the time comes, your new summary sheets, used in conjunction with last year’s tax return will serve as a useful checklist against this year’s information.
This process won’t identify any new items – you’ll need to add anything new to your summary sheet at the end of each month as you’re going through the year – but it will help identify anything missing that qualified in previous years.
- Pulling it all together.
If you have followed this system consistently month after month, the ‘pulling it all together’ bit will be really easy.
Your summary sheets will be complete, your paperwork will all be sorted and you’ll have a package of information that can be handed over to your accountant for checking and sign off.
Even if you only manage to follow tip 1, at least you’ll have it all in one place!
Happy tax planning! Now that would be nice, wouldn’t it?!