How To Organize Your Home Business Files For Tax Purposes

Speed up the tax filing process by following these simple organizing tips to keep your home business paperwork in order.

It's tax time again. Do you face hours of sifting through piles, drawers and miscellaneous boxes in search of the records your accountant needs? Does it take you weeks to do your taxes because it takes so long to find your documentation? Do you find postage receipts along with the exterminator's phone number? It doesn't have to be that way. Your life can be easier. Simply follow these tips to organize your paper jungle and save yourself a ton of time when tax time comes around next year.


First, you must decide what kind of information you need to keep. Make a list of broad categories which will cover anything you might be able to deduct or that you'd have to prove as an expense.

Here are some of the most common categories along with the types of records you'll keep within them. Try to keep original receipts whenever possible as well as itemized credit card statements.

Office Supplies: postage, paper, envelopes, folders, files

Inventory: Anything purchased to sell, who it was purchased from and when

Income: All payments to you for services or products sold, who paid, how and when

Financial: Credit card statements, bank statements, loans, investments

Equipment: computer, printer, copier/fax, ink cartridges, furniture

Auto: gas, maintenance and mileage

Utilities: phone, cell phone, internet service

Home/Apartment: rent, mortgage, relevant to the area you use specifically for work

Education: community courses, online classes, self-study books, seminars

Charitable Donations: free products or services you've donated, monetary contributions

Travel and Entertainment: restaurant receipts, airfare, hotel and rental car costs

Marketing: business cards, brochures, ads, printing, designing, distributing

Miscellaneous: If you aren't sure if you need it or where it fits, keep it here just in case


There are a variety of computer programs which can be used in keeping track of many of the things you've listed. How comfortable you are with computers and software programs will determine how much you'll want to keep track of this way. You will likely use an accounting program, a word processing program and possibly a spread sheet program.

Common PC programs include: Quicken, QuickBooks, Word, Excel and Access. Depending on your needs, you can purchase programs individually or in packages such as MS Works or MS Office. In addition, most banks allow you to bank online. Take advantage of this if it fits your preferences. Using such programs also can be immediate time savers because they calculate ongoing totals or running lists of facts and figures. This information then becomes easy to summarize at tax time with a few clicks and keystrokes.

Sometimes it might also be worth it in the long run, to have a professional come to your home to set everything up and to show you how to enter your data. But no matter who sets things up initially, you must choose a regular time to enter the data or you will be no further ahead than you were with your paper stacks. Set aside a particular day of the week or month and pencil it into your day planner if you have to in order to stay on track.


Even if you want to keep track of most items by computer, there will still be paper that you need to hang on to. Original copies of purchase receipts, customer receipts or quotes are good to keep in paper form even if the figures are recorded in accounting programs for example.

For those who prefer or must use hardcopies, establishing a basic filing system is all it takes to stay organized. You'll need to purchase file folders, hanging files and a box or cabinet to keep them in. Expandable wallets are also helpful especially if you'd like to sort by month. Envelopes are also useful to keep smaller pieces of paper from falling out of hanging folders.

You'll also want some sort of ledger system to record things like income, expenditures, mileage, and general notes. Office supply stores carry preprinted books with appropriate columns, or you can design and write out or print out your own. Keeping records like this will make it easier to provide totals at year-end without having to go through every receipt or transaction again.

Next, make a file for each category and put a ledger with it if necessary. You may or may not always need folders within the files. For example, label a hanging file "Office Supplies", put a ledger sheet inside and simply note your purchase on the sheet and put the loose receipts in the file. Again, use an envelope if all receipts are the small cash register type which could easily fall out.

Just like with computer records, make sure to enter data on the ledger sheets, or file loose pieces away as soon as possible. If you can handle an item only once, as soon as you get it or write it, you will save time as well.


Keep records at least until the next tax season then check with government guidelines to see how long to keep them after that. To make paper files a little thinner, try to get rid of all of the extras that might come with the part you need. For example, most credit card and bank statements are mailed with extra pages of advertising or information that is duplicated monthly. Tossing those pages is not a problem and will free up significant file space.

Finally, whatever you do, do not store any valuable information where water could potentially drip from above or flood from nearby. You don't want to loose all of your organizing efforts to a washing machine or sink overflow.

Keep your documents organized, safe and dry and you will also keep your sanity at tax time.

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