Start This Simple Habit Now to Make Tax Season a Breeze, CPA Says

As a freelancer or side hustler, managing your taxes can be a daunting task, especially when juggling multiple clients, projects, and income streams. However, there's a simple habit you can start today to make filing your taxes easier, according to certified public accountants (CPAs). By maintaining detailed records of your income and expenses throughout the year, you can save time, reduce errors, and maximize your deductions. Let's dive into the benefits of this habit and how to implement it effectively.



Why Keep Detailed Records?

1. Accuracy in Tax Filings: Maintaining organized and up-to-date records ensures that you accurately report your income and expenses, reducing the risk of errors and potential IRS audits.
2. Maximizing Deductions: By keeping track of all your business-related expenses, you can take advantage of all possible deductions, lowering your taxable income. Common deductions include home office expenses, travel expenses, supplies and equipment, professional services, and marketing and advertising costs.
3. Time-saving: Having your records in order throughout the year saves you time during tax season, as you won't have to scramble to find receipts and invoices at the last minute.
4. Compliance with Tax Regulations: Keeping detailed records helps you stay organized and compliant with tax regulations, reducing the risk of penalties and stress.

How to Maintain Detailed Records

1. Keep Digital and Physical Copies: Store digital and physical copies of receipts, invoices, and bank statements. You can use a dedicated folder or a digital storage service like Google Drive or Dropbox.
2. Use Accounting Software: Utilize accounting software like QuickBooks, Wave, or Zoho Books to track transactions, categorize expenses, and generate reports. These tools can help you stay organized and make tax filing easier.
3. Separate Personal and Business Finances: Open a dedicated business bank account to separate your personal and business finances. This makes it easier to track business-related expenses and ensures that you're not mixing personal and business transactions.
4. Maintain a Mileage Log: If you use your vehicle for business purposes, keep a log of your mileage and related expenses. This can help you claim the appropriate deductions on your tax return.
5. Automate Expense Filing: Use tools that utilize Veryfi Lens and Veryfi ∀Docs to automate the expense filing process. These tools can capture, categorize, and file expenses on your behalf, ensuring that all your financial records are up-to-date and ready for tax season.



The Bottom Line

Starting the simple habit of maintaining detailed records of your income and expenses throughout the year can significantly simplify your tax filing process. By keeping organized, accurate records, you can ensure accuracy in your tax filings, maximize deductions, save time, and stay compliant with tax regulations. So, don't wait until the last minute – start this habit today and make tax season a breeze!