From Nichelle Stephens, member of the New York Incubator and Founder of Keeping Nickels.
Income Tax deadline is only 21 days away!
If you are getting organized for tax filing, don’t get stressed out! Keep it simple. Close your eyes and think of a wave on a beach. Your money is a wave, and you have to keep track of inflows (income) and outflows (expenses).
The money you earn is income. That will come from sales income from your business, paycheck from a job, or payment for services you performed. Unless you stuff all your money under a mattress (I don't judge), then all your income has been deposited into one of your bank accounts. Make sure you have the W-2s and 1099s for the work/services performed as well.
For income taxes, the focus is more or your outflows, since deductible expenses reduce your taxable income so that you get a refund or pay less back to the government.
Your money is coming out of four main places: business bank accounts, business credit cards, cash, or personal accounts. Get an inventory of what statements you have and then contact your bank to get if statements are missing. [You may be able to download statements, but for some banks, snail mail is the only option for bank/credit card statements older than six months.]
Here’s a basic checklist of what you need.
Bank Accounts: Collect bank statements from your business checking account from last year. You will need January 2008 if your December bank statement doesn’t include through December 31, 2007.
Credit Card: Gather all credit card statements business account from last year. You will need January 2008 if your December statement doesn’t include through December 31, 2007.
Cash Receipts: Collect all CASH receipts (taxi, lunch, delivery). If you have not already done so, separate the business receipts from the personal receipts. Your CPA will love you for that! Separate the cash receipts from credit/debit receipts. If you paid via credit card or debit card, then it is already listed on a monthly statement. Going forward, try to pay for most business-related via debit or credit card so those pesky little receipts don’t pile up. [BTW, Shoeboxed is a new service that will scan receipts and export into Quicken.]
Personal: If you made purchases or paid business expenses via a personal checking or personal credit card, then go through your personal statements and check off every business expense so that they can be included as deductible expenses.
If you're in doubt about whether something is deductible business expense, you can look at the Schedule C for the general categories or ask you CPA.
Now, open your eyes and get ready for some deep navel gazing at your finances, but don't forget to breathe. :)