We all know how exciting and satisfying it can be when making resolutions. Many people adopting the traditional vow to get healthy learn a new skill or take up a new hobby, but not many people are pledging to get their tax in order as the tunes of Auld Lang Syne ring out.
As mundane as your resolution may seem, sticking to it can allow you the chance to chase after the more lofty and exciting resolutions.
BMO Partner Dave Briese has put together some tips for setting up a financial record keeping system and how to stick to it.
- Throw away the shoebox method. Are you in the habit of just throwing all your receipts into a shoebox and dumping them on your accountants’ desk come July? Forget that method and take a swift step into the New Year, with a new method of keeping your receipts in a folder. Using tabs can help separate medical expenses from car expenses etc. It’s also important to remember that over time receipts tend to fade, taking a copy, scan, or photograph can be a good idea.
- Get a system that suits you. Before you run out and spend hundreds of dollars on software, talk to your accountant. Depending on your needs, a simple spreadsheet may suffice or you may be suited to using cloud-based accounting software. If you’re recording information in a spreadsheet or accounting package, it’s vital that you keep an actual copy of your receipts.
- Go electronic. There are a number of smart phone apps available that allow you to scan your receipts on the go. Remember for any electronic records you may have, do a regular back up.
- Know what you need to keep. As a general rule, keep records of any income you have received and any expenses you have incurred while generating your income. There are rules about what is and isn’t deductible depending on your profession, talk to your accountant about what records you need to keep.
- Don’t leave it to the last minute. Relying on your memory when June 30th rolls around isn’t the best way to go about things. Having the right records means a more accurate tax return, which can mean more money in your pocket.