If you’d like to get started digging into the cash flow in your business, check out this freebie.
If you really want to dig into write-offs, I’d also love for you to join the Tax Challenge happening next month to help you get all your docs ready for tax season. It’s totally free! And you’ll get my free small biz tax deduction guide.
Hello and welcome to episode 29 of the unfuck your biz podcast. As always, I am your host Braden and I am very excited today to chat with you a little bit about how to get started, DIY and your bookkeeping and getting prepared for tax season. Now, some of you may not really have any of your stuff together for 2019 that's totally fine and others of you may feel like you're more or less ready to crush tax season. I'm assuming most of you are going to fit more into that first category, but either way, I promise that no matter which of those buckets you fall into, I'm going to have some helpful tips for you today, so make sure that you stay tuned and don't worry. It's going to be a relatively short episode so I won't be boring you with too many of the nitty gritty details.
Now it is January 16 that's the date this episode is scheduled to release. I am recording it in December, so that might change, but probably is going to be the 16 and for a lot of us, it's still pretty early to be thinking about filing our tax return. But I want you to keep in mind that our goal is for you to do some preparation before you actually go plan to file your return. So even if you don't normally file until March or you know the day that it's due in April, that's okay. I want you to really listen and pay attention to the episode so that at a minimum, you know kind of what you need to do moving forward and you can better plan your time accordingly. Ideally, you'll take some time and now in January and in early February to get all your documents gathered and go through the steps that we're going to talk about on the episode, and that is going to make the process of filing your tax return a lot more smooth, regardless of how you do that, who you work with, or whether you're doing it on your own.
So here's what we're going to do. Uh, on the past several episodes I've been mentioning to you all about the free tax challenge that we are doing starting on the 27th so you can sign up now through the 24th for that. It is totally free and I'm going to be walking you through each day what you need to do to get ready to file your tax return. So on this episode I'm actually going to go through the outline of what we will be doing and the challenge and give you the basic tips here. So if you don't join us that's totally fine. You'll get some tangible takeaways in this episode, but I'm hoping that it will also encourage you to come up in the challenge. So let's get started. It is a essentially four, five steps. Step number one, the first thing you're going to want to do when you're getting ready for tax chat or not for the tax challenge when you're getting ready for tax season and filing your taxes is you need to gather your documents.
So I recommend getting a folder, maybe like a plastic box, some sort of a vessel folders, probably fine to collect all of your documents in. So anytime you get a W2, a 10 99 another fancy tax form that you don't really know what it's for, what it does, stick that in that folder so they're all in one place and you don't have to do what I do every year, which is go search like every drawer and your house for all your different documents. So you have those there and then what you want to do is go and grab all of your bank statements so you can save them electronically on a folder, on your desktop or if you're a hard copy person, print your bank statements, print your credit card statements, your PayPal transactions, any online system that is going to show business related transactions.
You want to grab those. And then if you've been saving your receipts throughout the year like you ideally should be for business, then you'll want to grab those as well. So collect all of that and put it in one place. That is step number one. The second thing that you'll want to do is begin to determine what is personal and what is business. Ideally, you're going to have separate bank accounts for your business then for your personal, but you may not have that and it's gonna make things a little bit difficult but still doable. Just a side note here for everyone, if you're wondering what the banking requirements are, here's the just, if you have a sole proprietorship, you've not formed an LLC essentially, then you should have a business bank account, but you're not legally required to have one. Once you form your LLC or you have an S Corp or a C Corp, then you have a legal obligation to operate a business bank account.
I say that just so that you know that you don't need to worry too much about your business bank account if you don't yet have one. Alrighty, so if you have been using a personal account for both personal and business expenses, what you're going to do in step one and this is both for your bank accounts, your credit card statements in any other place you're making payments is to go through all of those statements and highlight what you've done for your business or if it's an account where it's mostly business and a little bit of personal, maybe highlight the personal whatever's going to take you less time, so separate the expenses that way. That's kind of the first thing that you can do to get started and then you have all of your statements in one place and your folder you have highlighted circle whatever you want to do, all of your transactions that are related to business.
After you do that, it is going to be time to start issuing some 10 99 if you need to. Once you go through all of your records will know if you've paid any third parties for services during the year and if you have paid them $600 or more to do work on behalf of your business, they will need to get a 10 99 there are some exceptions, but I'm going to reserve all of those for next week. Episode 31 is going to be all about 10 99 so if you're curious about it, I'll talk more then. But uh, that's kind of the basics. Not all of you are going to need to worry about it, but if you're working with contractors throughout the year, you need to make sure you have your 10 99 is in order and those are due at the end. Usually at the end of January. I'll look up the exact date and put that in the show notes for you all.
Okay, so the final step is to get your books in order. So if you have been using QuickBooks wave and online tool like that throughout 2019 then you may already have this done and you just have to go in and tidy up the books. That's awesome. That's perfect. Perfectly fine. Do that. If you have not used the system for 2019 and you need to do all of your books for last year also fine. Not ideal, but you can make this happen. And what I recommend in that case is actually doing it in a spreadsheet. So use Excel or Google sheets. That is the easiest way unless you have a ton of transactions. So if you're selling a goods and have a lot of inventory, then you might want to talk to a professional at this point. But what you can do to get started and what I recommend is going to look at an IRS schedule C if you're a sole proprietor or a single member LLC, you're sole owner of your business and checking out all of the deductions on the schedule C. so the schedule C is the tax form that your business income and expenses go on.
When you file your taxes and it has buckets or categories. I always use the word buckets, but categories of deductions on the form. And then you can use those categories to create the columns and your spreadsheet. And you can do a different page for each month in your spreadsheet or you can do a whole year on one. It doesn't really matter. The separation of months is really just more for financial analysis and your own benefit. For tax purposes, you just need your yearly total so you can get started that way and add up all of your different categories. So you're going to have a section for marketing, a section for education. It'll make sense when you check out schedule C. so in the tax challenge, I actually provide you with my uh, template that I've created with all the formulas and all that good stuff. So if you join us, you will get a copy of that.
But if not, you can totally make your own as well. So that's it. That's the steps. I know I probably made it sound a lot easier than you might feel like it is and it is going to be a little bit time. You know if you're not doing your bookkeeping on a weekly or monthly basis, it is going to take you a little bit of time to get it all wrapped up at the end of each year, but with these steps it will at least give you a chronological order to do things in a way that will save you some time in the end. If you want a little bit more help beyond this and you want to get a little bit more on track with your taxes and the future months, you can check out my freebie which is called how to be your own tax pro. You can go to the website unfuck your business.com to check that out.
You might enjoy all the tips in there and again, don't forget to join the tax challenge. If you're interested, it is totally free. You're going to get video lessons each day of the challenge and then you will also have access to Q and A's. With me in the Facebook group. So if you want more help and more details on each of the steps we went through today, come on over and join us. That's all I have for this episode. A little shorter probably than our average Thursday episode. But, uh, very excited to bring you some more tax information in the following weeks. As always, if you enjoyed the episode, don't forget to subscribe and share with your friends. Leave a review. Always very much appreciated. And I hope that you have a wonderful day.
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