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Monday, April 15, 2013

Making tax filing easier

It's tax day as I write this blog.  I put off the dreaded task until last week but got it done and am now thinking about how to make this task easier next year.  I don't think I've met anyone who looks forward to the process of filing taxes.  You have to be able to find and provide supporting paperwork for your return, no matter who does the filing.

I started doing a few things differently last year that helped.  But this year, now that I have a SafelyFiled account, I plan on doing things even smarter and being proactive which should really help for next year.  Since the pain of filing taxes is still very fresh in my mind, I thought now would be a good time to get new processes in place and keep them up so that next year, barring any crazy new tax laws that I'm not prepared for, filing will be much easier.

Paper Organization

The first change we made since we own a small business as well as personal files,  was that we set up our business file folders to correspond to the filing categories that line up with the Turbo Tax categories.  That
Before SafelyFiled
helped tremendously this year as we didn't have to stop data entry to go through the stack of receipts and other business related papers to sort them into the proper categories.  That was a great start but my files still look a little chaotic as seen in this photo.

Digital Organization

Now that we are using SafelyFiled, I've set up folders in my SafelyFiled account to follow that same model.  But instead of keeping paper copies of all of the receipts and supporting documents, which are no longer necessary as I file electronically, I will scan or use my smart phone to take images of these paper documents, shred the originals as I go and keep only a digital copy in my SafelyFiled account. That way, if I am audited in the future, I can simply go to my business files for the appropriate year(s) being audited, and can either grant access to the auditors so they can view them or I can download all of the docs to a thumb drive or CD and provide that to the auditors if they'd prefer.  Instead of the paper clutter, now my files look like this:

After SafelyFiled
Secondly, after I completed my return this year, I discovered that to print them for my physical folders, it was going to be 50 pages long!  Printer ink is expensive and it takes up a lot of space to store those records for 3 - 5 years as required by the IRS.  Not to mention the time it will take to shred them all when I no longer need to keep them.   So, instead of printing my tax return to the printer, I opted to print them directly to a PDF file.  Then I uploaded that file into my SafelyFiled account under my Taxes -> 2012 -> Completed Tax Files folder.  I then added helpful tags to help me quickly locate it in the future if needed.  I also left a note to myself recording the steps I took to print to PDF, in the event I forget how I did that when it comes time to do it again next year. I also set up a reminder on my file to nudge me along a little sooner next year.

Pain free option

I may not do my own taxes in the future.  I may opt to hire an accountant because my taxes are getting more complicated.  If I add my supporting tax documents to SafelyFiled throughout the year and decide to hire an accountant next year, I can simply invite my accountant to share in those folders where they can view all of my supporting paperwork and even download them to their computer if desired.  I can leave instructions as notes on files and we can communicate on very sensitive information securely without having to transmit data via email or over the phone, which is very unsecure.

For tax accountants (and other service professionals), this would be a great way to build loyalty for your business as well.  You can use SafelyFiled for your own business then sponsor or refer your clients to SafelyFiled and start them off by uploading their tax return forms for them!  I for one would be so very thankful to my service professional for doing that for me!

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