Getting a Jump on Year-End Preparation

 Posted by on November 10, 2008  Add comments  Tagged with: ,
Nov 102008

Last week, the kids and I went through all of their toys and books, in preparation for the holidays. I have two big boxes to take to the consignment store, and many more items currently being auctioned on eBay.

This morning I spent a couple of hours preparing for year-end. My husband works from home as an independent contractor, and because we essentially operate a business in our home, we keep very careful records for taxes.

I manage our finances, and my office is in our kitchen. To maximize my small work space, I keep our household files in a portable hanging file box, which I store in my utility closet. We also have a filing cabinet in our basement for papers that are necessary to keep, but aren’t referred to regularly. (You can read all about my filing system here).

I prepare our tax return using TurboTax, so at year-end I enter all of our financial transactions in Quickbooks. For record-keeping, we save all papers necessary to substantiate deductions in a labeled banker’s box. We store these boxes in my husband’s shop, on a high shelf. We keep only the last seven years of records, in case of an audit, so each year we shred and recycle the contents of the oldest box.

To make finding necessary documents easy, I keep our record boxes orderly by filing papers by category, in labeled manila folders. Since these files are just going into storage, I don’t use new folders. To save money, I save our used manila folders whenever we purge and organize our files. At year-end, I turn the used folders inside out, so I have a blank tab, and label them with our household file categories:

Then, I sort through our household files, and transfer anything necessary for tax preparation into the corresponding labeled manila folders. I take this opportunity to neatly organize each file, and purge anything that is no longer needed.

The tax records go into our banker’s box, which is labeled in pencil, so that it can be reused:

If I ever need to find a document while preparing our tax return, I know right where to look, because all of our records are neatly organized by category.

It feels really good to have this project completed, because now I have a whole pile of papers to shred and recycle,

my household file box is nice and neat, and ready for the upcoming year,

and my mail sorter is EMPTY!

I love it when it’s empty. When it’s crammed full, I spend a lot of time worrying about what might be lurking in there, waiting for attention.