Congratulations! It’s been another year of business, and it is quickly coming to a close. You’ve made it through Thanksgiving and just have Christmas left to go. It’s an exciting time and it is easy to let your guard down. Look back at your year and see all that you have accomplished. You are not the same business person you were when the year began. I’m proud of you, and you should be proud of yourself. Let’s not rest on our laurels though. 

Don’t forget January is right around the corner and it will be another new quarter. Come the end of January, you should be getting your final balance sheets and profit-and-loss statements from your accountant, bookkeeper or yourself. The 1099s and W2s need to be mailed out. Then, there is that large box of receipts that you haven’t dealt with all year. You kept saying you would get around to it, but you never did. Now, you have two options: go through them all and organize it, or hand it all off to the tax person and have them go through it. I’m sure a lot of you will pick option two for the additional cost not to have to deal with it. I can’t blame you. There is a better way though. It doesn’t have to be like this every year. Let’s get you off to a better start this year. 

You need a filing system and a place to keep it. I have a small basket that neatly holds 8.5”x11” manilla folders. I start every year by making 12 new folders—one for each month. Ok, I ask my wife to do it, but then I can read the months. Now, I have a space to put everything as it comes. When you print out an invoice for a client, print one for yourself as well. Get a receipt for gas or from the supply house. It has a place to go. Got a bill from your website person? It has a place to go. You get the idea. Anything that comes in for January goes in the January folder. Even the bank and credit card statements that come in February have a place to go as soon as they come in. Now, you have one month down and only 11 more to go. This is going to be your best year yet. 

How do you know how profitable a project really was when half the supplies purchased for it are just under random expenses?

If you want to step it up a level, label your receipts as you get them. You are at the store and buying supplies for the Johnson project on Mill Ave. As soon as you are handed the receipt, write Johnson Mill Ave on it. Also, write on the receipt as soon as it prints that it was supplies or materials or a tool for the company. Little notes can go a very long way when you have to look back at something 14 months later when you are doing your taxes. It will also help you or your bookkeeper better track your expenditures and make sure they are going against the correct projects and accounts. How do you know how profitable a project really was when half the supplies purchased for it are just under random expenses? Take the extra five seconds each time to make sure your life and business are organized. 

Now, you have a stack of receipts and invoices sitting in a folder. What do you do with them? Personally, I will scan everything in the folder and send it off to my bookkeeper at least every two weeks if not once a week. The day doesn’t really matter, but I prefer Saturdays. It’s a simple 15–20-minute task at most. It keeps her up to date and working on my file at all times, and I get the reward of more up-to-date numbers if I need them. I will know what projects are looking like sooner; I will know what my cash flow is; and I have a better idea of what profit is looking like at all times. All of the notes help your bookkeeper properly post your expenses and income and gives them a better picture of your business so that they can give you better advice. 

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What about W9s, Certificate of Insurance (COI), etc? Make a folder for them. Your backend office situation should look like your trailer. A place for everything and everything in its place. I know what a lot of your trailers look like. We will have to tackle that subject another time. Until then, clean up the trailer and your office life. Take a few extra minutes each day to make your life easier. It will pay dividends when you develop the good habits. You will save money at tax time by being organized and already having the books done. You won’t have to figure out eight-month-old invoices that you can’t remember anything about. Your bookkeeper and tax people will love you. You won’t have to file for an extension because you will be ready to go quickly. As long as you are setting your tax money aside and paying your quarterlies on time, you could be paying that bill as soon as late February or March with no concern about it. 

You’re not paying quarterlies or setting aside money? This is the year to change that. You will have the clean books to be able to accomplish it. You can work with your professionals to figure out what percentage of revenue should be going into a tax account that just sits there. This is the new you. This is the better you. This is the year you get a handle on your receipts!