Appearing as part of our 2011 fiscal year end and tax preparation resources for small businesses.
"Right now, I keep my data in a shoebox"
1. Decide how you will be tackling the shoebox. You have four options: a. You can attempt to link your bank accounts or upload bank statements. If all of your receipts are reflected in that data, you won't need to enter each transaction manually. b. Use a receipt service like shoeboxed.com. c. Hand the box over to an accountant (perhaps along with a nice box of chocolates or bottle of wine) and have them clean up the mess. (We can help you find an accounting pro if you need one.) d. Manually tackle this shoebox yourself.
If you’ll be handing the receipts over to an accountant, you don’t need to continue reading. If you’ll be using a receipt service like shoeboxed.com, you'll then follow the instructions for expense tracking software. If you're connecting a bank account or uploading electronic statements, follow the instructions in our bank statement post. If you’ll be manually tackling these receipts, read on!
2. The next thing you’ll need to do is organize your receipts. You’ll want to separate them into two piles: one for business and one for personal. If you have multiple businesses, separate each of these into different piles as well. Once they are divided, you may want to split each pile into two: one for expenses, one for income. Do not enter all of your receipts into one business if you have multiple businesses!
3. Now that your receipts are organized, sign in to Wave and go either Income or Expense, whichever you’d prefer to enter first.
4. Select Quick Entry, and follow steps 5,6, and 7 for each receipt.
5. For Date, input the date the expense was incurred. For amount, input the amount before taxes. The Customer and Vendor field are not required for tax purposes, but should be filled in if you want to take advantage of the Expense by Vendor and Income by Customer reports in Wave. Select the relevant Tax Rate; Wave will calculate the amount and update the total. If you need to adjust the tax amount (for instance, on a bill where only some items are taxable) you can override the calculation manually. If you don't have sales taxes set up in Wave yet, click the "+" sign next to that field and follow the steps.
6. You probably don't have receipts for things like credit card fees, bank service charges, direct withdrawls, or anything paid out of PayPal. Double-check your bank statements and credit card statements for these charges, and enter them using the same steps as above.
7. Once you’ve input all of your information through Quick Entry, you can skip Step 2 and move directly to Step 3!
Need more help? If you want more assistance, or if you prefer to let someone else do the work, we can put you in touch with accountants and bookkeepers from the Wave Pro Network. Find a Wave Pro.
For more information about small business tax preparation and fiscal year end, see our Year-end Survival Guide.
Make your next tax year as pain-free as possible: Sign up for free online accounting for small businesses, by Wave.