Sunday, January 13, 2013

The Paper Monster

While I know it is only January, and for the majority of the country W-2s won’t appear until early February, but tax time began in my house on January 1.  With both Samantha and I owning our own businesses, tax time is a time of extra work, hopefully ending in a positive result.  The best way to earn that positive result in the end?  Good planning.

I have planned well in the past, preparing files at the beginning of the year for receipts.  Then, through the year, I consolidated information periodically to prevent a huge load of work dumped on me at the end.  This year, I employed a slightly different method - the wait and get dumped on method.

While I am only a short time into the effort, I can tell you right now that the planning method is much better.  After a year of stuffing receipts into a drawer until they really couldn’t fit anymore, I figured I better start sorting them.  With Samantha’s help, we knocked out the sorting in an afternoon and evening.  Now comes the documenting.

It has taken me four days to get through the food receipts.  Just the food receipts.  I have sorted them into months, added the information into a spreadsheet, scanned the receipts, and thrown them away (which is allowed by the IRS).  Four days.  I could have probably spent thirty minutes one day a month on all my receipts, sorting, documenting, scanning, etc.  Instead, I waited until now.

I still have gas receipts, office supplies, music supplies, beauty care supplies (for Samantha’s Mary Kay business), utility payments, home mortgage interest, home maintenance expense receipts, health care, and a plethora of other receipts to document.  After that, I will need to document business travel and make decisions about the standard deduction offered by the IRS for travel versus the actual costs.  Then I have . . .  needless to say, the list is expansive.

I will be the first to admit my lack of a plan for the past year’s taxes was first the result of laziness.  I just never got around to it.  Later, though, I didn’t want to battle the monster I had created.  The pile of receipts had just grown too large to handle, so I ignored it.

With solid pre-planning, I could have been wrapping up my yearly taxes over the last four days.  Instead, I am embarking on a journey as long and drawn out as the first Hobbit movie, while not being nearly as exciting.

The tax benefits of owning two businesses are great; nearly everything we do is tax deductible.  Successful planning is key, though.  

As always, I extrapolate my experiences into life lessons.  I think this one is fairly obvious, and I can see where, if employed properly in other areas of my life, it will yield better results.  Planning is important.  Sure, flying by the seat of your pants can be exciting, too, but it definitely isn’t the way to run your entire life.  

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