The accountant is getting antsy for 1099s. Where are the 1099s? Don’t I know it’s TIME TO DO THE TAXES? Well….yes. Where are the 1099s, there in the disorganized organization that passes for my file drawers?
Thought I’d saved the PDFs to disk. But if I did, I can’t find them. As the desktop iMac has slowly faded into senility, I’ve slowly migrated my operations to the MacBook. But the MacBook won’t talk to the decrepit printer; the only computer I can print off of is the iMac. The iMac is connected to the external hard drive, and so I’m constantly e-mailing stuff back and forth because I never have figured out how to hard wire them together and because the directory organization is now different in the two machines and I don’t want them getting conflated and because I’ve been too lazy and too techno-flummoxed to update to whatever species of large cat is the current OS so I can get into iCloud and right now I’m too sick to brave the crowds at the Apple store to contend with that. Which is a disorganized way of saying no, I’m not organized!
The trouble with a small business is that like membership in Medicare, it breeds great wads of paper. Paper multiplies in my file drawers as wire coat hangers breed in the dark of a closet. I need more file cabinet space. And I need to quit structuring my filing system on the fly.
So this morning the dogs got locked out of the room while I spread the contents of several hanging file folders across the floor and reorganized them. Now, I think, we have it:
Hanging file 1: S-Corp receipts
• File Folder: Receipts: current year
• File Folder: Receipts: last year
• File Folder: Receipts: from long ago
Hanging file 2: S-corp tax stuff
• File Folder: Tax paper: current year
• File Folder: Tax paper: last year
• File Folder: Tax paper: from long ago
Hanging file 3: S-corp incorporation papers
• File Folder: CE Desk incorporation paperwork
Hanging file 4: Website hosting and monetizing
• File Folder: Domain names
• File Folder: Bluehost
• File Folder: Adsense
And what, you might reasonably ask, is meant by the term “tax paper”? Well, it’s all those pieces of paper people throw at you or you throw at others that might have some bearing on tax preparation other than receipts for purchases: stubs for checks received showing the job for which the check paid; statements sent to the issuers of said checks; statements sent from vendors; several strange pieces of paper emanated by the Great Desert University. If I don’t know how to classify it and I think someday an auditor will demand to see it, that’s where it goes.
Yeah, I know: why the hell aren’t I scanning all this garbage to disk?
Well, first because my scanner runs s-o-o-o-o-o slowly that it’s actually painful to use. There are other things I’d rather do, in the brief time allotted to me on this earth, than sit here and watch that scanner groan along.
Second, because I don’t trust digital stuff. It’s all very nice to back it up to a hard disk. But what happens when the burglars steal that along with your computer?
Third, because I figure iCloud comes with my MacMail subscription and that’s where I ought to be storing this stuff. It’s cheaper than Carbonite and looks like it will be easier to use. Maybe.
Fourth, because I’ve been too lazy to break free enough time to go deal with the Apple people and figure out how to get iCloud going.
Fifth, because I’ve been putting all that off until I buy a new iMac (or something) but haven’t gotten around to buying a new iMac (or something) because I haven’t decided which I really need, a new iMac or a second MacBook or a Mac Mini with a large monitor/TV screen, and besides I need a new printer/scanner but haven’t figured out which one of those I want, either. We call that “cascading excuses.”
It’s the Niagara Falls of cascading excuses, come to think of it.
Time to turn off the tap on the excuses. Let’s consider what we need to save and how it can best be organized to simplify data storage and retrieval.
For your business you need:
• Records of your business’s organization and registration with government agencies
• Proof of income
• Proof of expenses
• Records of payments to contractors and agents
• Banking records
• Credit card records
• Copies of government forms filled out and submitted by you
• Copies of government forms filled out and submitted by your paid contractors, agents, and customers
• Information about your vendors, clients, and subcontractors
Almost all of these are now accessible electronically and can be saved as PDFs. Others, such as hard-copy checks, can be scanned to disk.
The ideal filing system, in my ideal world, would have electronic and hard-copy incarnations, and both would be organized along the same lines.
Online
Folder: Receipts
• Scanned receipts for operating expenses, supplies, and travel
• Scanned or downloaded receipts for website hosting, domain names
Folder: Clients & correspondence
• Copies of e-mail correspondence
• Scanned copies of hard-copy correspondence
• Spreadsheet recording clients’ e-mails, Website addresses, snail-mail addresses, rates, amounts billed, and amounts collected
• Statements to clients, organized by client name and date
Folder: Incorporation Records
• Scanned copies of original incorporation forms and records
• Copies of annual corporate reports
• Scanned copies of payment records
Folder: Subcontractors
• Each person’s W-9
• Each person’s 1099
• Invoices from each subcontractor
Folder: Banking records
• Copies of checks scanned for e-deposit
• Monthly or semi-monthly Quickbooks downloads
• Scanned or downloaded copies of credit card statements
• Scanned or downloaded bank account statements
• Downloaded PayPal statements
Folder: Income records
• Adsense statements
• Amazon Associates statements
• Advertiser statements
• Royalty statements
• PDF pay statements from community college (personal, really; but might as well keep all the income records together)
Hard Copy
Hanging file folder: Receipts
• Receipts: Original receipts for every expense
• Charitable Giving: Receipts for donations
Hanging file folder: Statements and Invoices
• Statements from vendors and business organizations
• Invoices to clients
Hanging file folder: Correspondence
• Any hard-copy correspondence that arrives or is sent by snail-mail
• Printouts of e-mail correspondence that might be important
Hanging file folder: Incorporation records
• Annual reports
• Copies of annual government fee
• Original incorporation papers
Hanging file folder: Website hosting
• Bluehost
• Domain name records
Hanging file folder: Subcontractors
• W-9s
• 1099s
• Invoices from subcontractors
Hanging file folder: Banking records
• Original checks scanned for e-deposit with bank receipt printout
• Monthly or semi-monthly Quickbooks downloads, hard copy
• Original credit card statements
• Original bank account statements
• Downloaded PayPal statements, hard copy
Hanging file folder: Pay statements
• Printouts of community college pay statements
Hmh. That’s going to take a few hours (as in “days and days”) to put together. Meanwhile of course we’ll be keeping up with blogging, teaching, editing copy, and hustling business at the same time. 🙄
The heck with it. I’m going to take a nap.
Have you got a system? What’s it look like?
I scan paperwork, create PDFs and save it all to a flash drive which is NEVER kept with my computer. That way, I can carry my stuff everywhere I need to in my pocket. I have a separate flash drive for all my tax info with more than enough space to spare. I did this when I had a business too and never had a problem with storage on such a small device. If I needed to buy another drive, I did.
Every single opportunity I get to receive items online, I take it. (W2s, bank statements, investment statements, 1099s, etc) I never print anything out which, for years up until now, has been fine. I used to let people send me stuff which would promptly be ‘filed’ away, with the result that I had a ton of outdated paper lying around the house. I decided to try digitizing everything even though I was wary at first. Now, I wouldn’t do it any other way.
I save everything that needs to be saved in e-folders by subject and year, saved to the flash drive. The file drawer of my desk is empty and I gave my son the freestanding file cabinet because I didn’t need it. The only ‘filing cabinet’ I have is a mid size plastic storage bin with lid for things like marriage/birth/educational/etc. certificates and passports. In the event of a fire, I can easily grab it. Of course, if I lose my flash drive/s I’m screwed. I’m considering online backup.
We went with Quickbooks and if you are not an accountant you will be totally lost setting it up so we hired someone.
At years end the Mrs. prints the profit and loss statement and we give that to the tax person that does our 1020-s.
After that is done we have our 1040 done.
IRS forms give me the willies just because the way they write the instructions.
Backups, yes. We just got new PC’s with Terrabyte drives.
Shares are set up and we back up to each other and then I back up the financial stuff to a 300GB solid state drive.
If that is not enough I burn DVD’s and have them stored at my partners house. He does the same, I have his DVD’s here.
I mean what good is it to have a backup if your house burns down or some Soviet space craft comes smashing through your roof?
Get those backups off site.
Have you ever thought about using Dropbox.com? It’s free and it doesn’t require the latest cat from Mac to run it. Pretty much if you have the internet, you bring up the website and get into your dropbox. I like to think of it as an online flash drive.
@ Quest and Budget Glamorous: Take a look at Carbonite and Mozy. They have automatic back-up features, and the stuff is getting backed up into the Cloud, so it’s always off-site. This obviates the hassle of having to back up onto a flashdrive and remember to carry it with you (or grab it as you’re escaping a fire) or having to burn disks and schlep them to the office or a friend’s house.
@ George: Rilleh? I started using Quickbooks Online. They call the low-rent version “Simple Start,” and it’s very easy to use. My accountant did help me, briefly, to set up the books for the little business, but once she showed me the basic principles, I found it pretty fast and easy to do. This January I set up an account for my personal bookkeeping and so far have had no problem. The beauty of the online version is that your accountant can get in and then she can do all the report-making and form-filling. All you have to do is keep the books in the standard way, which is pretty easy because Quicken makes it hard for you to get creative.