☆ December 26, 2010
The day after Christmas, I start on my taxes. I love preparing my tax paperwork. Seriously. I look forward to it.
During the year, I stash receipts in a little basket on my desk. When my credit card and bank statements arrive each month, I go through and check off each receipt on the statements (and, in doing so, can easily determine if there are any bunk charges).
Then I put the receipts in a bright little accordion file, clumped together by month. The statements go in regular file folders along with other bills that arrive by mail – insurance, phone and internet, utilities, etc.
This little routine happens every month.
The day after Christmas, the real fun begins.
I get a nice pad of recycled, college-ruled paper and a pen I’m in the mood for, and title a series of pages with the overarching sections of all my expenses: AUTO, HOME OFFICE, HEALTH, POST OFFICE, BIZ SUPPLIES, ANIMAL, etc.
Then I go through the year’s receipts, month by month. I take one month’s worth and organize them into the above categories, secure them with a clip, and go on to the next month.
I then get out my past check carbons and my credit card statements and cross reference my receipts with my credit card statements and check carbons. As I do this, I write down the dollar total of every receipt in the section in which it falls, and mark off the charges on my credit card statements with blue highlighter so I know what has been accounted for. Some things, like my website hosting fees, are listed only on my credit card statement, and so marking the receipt charges in blue lets me easily see what other expenses I need to tally. Other things, like payments for hay, are only in my check carbons.
I write everything down under the proper heading. All gas receipts are listed together on the AUTO page. Dog food and vet fees go on the ANIMAL page. Office supplies are listed together, as are inventory supplies and expenses. All post office receipts are copied down and tallied together. Etc, etc.
Then I pull out my file folders – I keep them in a box like this, which has been with me since New York and is very handy to tuck away upstairs and then carry to my desk when I need it. Tallying the bills is easy and straightforward; phone, internet, and electricity go in the HOME OFFICE section; my two bi-yearly car insurance payments go on the AUTO page, etc.
Then I do it all over again for the next month.
Once I’ve completed the entire year, I add up the totals for each section.
I then do a similar tally for income, by month, but that part is far less complex.
When I’m done, I have my entire financial year accounted for in a condensed form that fits neatly into a standard business envelope for storage.
I love doing this because it allows me to see the financial side of my life very clearly. I can see the arcs in my income throughout the year; I can see what expenses were higher or lower than the previous year, which seem legitimate in correspondence with income and which need to be assessed for the coming year. I can see how my business has grown and where it is weak. Being intimately aware of the money that flows in and out of my life is a source of pride for me, and it is empowering, no matter what the dollar amounts are.
If only I didn’t have to write a check to the IRS at the end of it!