How to Organize Your Finances (and Keep Them Organized)

Tax Day is quickly approaching and a refund sounds really nice, doesn’t it? I’m sure you all heard the news, If you own a business or side-hustle or want to maximize your tax refund, it’s time to get to work. I’m going to talk about how to prepare for tax season, some mistakes I’ve made over the years, and the fastest and easiest way to file your taxes from the comfort of your own home. Let’s talk about how to organize your finances.

How to Organize Your Finances and Prepare for Tax Season

Trust me when I say that you should avoid filing the day before taxes are due. I’ve been there and everything felt last-minute and extremely stressful. Staying organized and working with a professional are the two things everyone can do to make tax season (and Tax Day) as stress-free as possible. 


Track Your Spending and Saving Each Month

This is one of the most important things you will ever do for your financial wellbeing. Know what you’re spending, what you’re earning, come up with a savings plan, and look over everything each month. I always made it a habit to check my credit card statement online every one-two weeks. This helped me stay in check and on top of my budget, so I know when to curb spending. Knowing where I was at (even when I was just starting out and basically breaking even if not dipping into what savings I had) helped me make sure I never spent more than I could or should.


Stay Organized

Figure out a system that works for you. Some prefer a pen and paper while others like everything online. I love a paper calendar or note pad, but when it comes to finances, I need a modern-day spreadsheet. Being able to add things up with a single click and having easy access on my computer via Google Spreadsheets makes it all feel so organized.  I track all of my income so for me, that’s my salary (which is set every month), and then my side-hustle, which varies month-to-month.

When the 1099s start rolling in, I put them in my tax folder in my desk drawer so nothing gets lost. Learned that lesson the hard way a few years ago when I lost a couple 1099s and had to request new ones. I recommend scanning everything so you have a digital copy and the originals, too.


Write Off Business Expenses

You can write off any essential business expenses. For me, that’s my new digital camera and money spent on maintaining or developing my website: the server, design updates, and purchasing my domain each year. If you work from home and have a dedicated home office, a portion of your rent (or mortgage) and internet can be written off, too. A financial professional can help you determine what you’re able to write off.


Keep Accurate Records of Your Income

If you work full-time for a company, it is likely that you’ll receive a W2, which is all you need to show your income. If you have a side-job or projects or any other income like I do, you will need to keep track of that as well. Any time I sign a contract with a brand, I put the amount I’ll be paid in my spreadsheet. Payments come in anywhere between 30-90 days after a project is complete, so I do this to know what’s coming in, what I am owed, and what has been paid.

Something to note: You will only receive a 1099 if you were paid over $600 by a client (in my case, usually a brand partner). You are responsible for reporting all income earned, even if you aren’t given a 1099.


Plan Ahead: Put a % Away and Pay Your Quarterlies

Years and years ago when I was newer to all of this, I didn’t really track anything and had to pay a “surprise” $5000 more than I had anticipated. There were a lot of tears and it was a very stressful time. The good news is that I never made that mistake again. When you work for yourself, there can still be surprise tax bills after paying those quarterlies, so be sure to put a set percentage away.


Contribute to Your IRA

As someone who waited to start an IRA in my 30s, I can tell you that it’s never too late to start. You can put money in your IRA up until Tax Day (and that amount will count for last year) so once April 16 rolls around, your chance to contribute for the previous year will have officially come to an end.

I am now four years into having a SEP. I would recommend sitting down with a planner or doing a little research and coming up with an investment plan that works for you. It’s so important to save for retirement but it’s also important to make sure you have an emergency fund, and that you’re saving for your more immediate future plans (owning a home, car, investments, etc.)

The last few years, I put away about 15% of my earnings in retirement. It was a number that was decided at the end of the year vs pulling something out each month. Not knowing for certain how much we’ll make is reason enough to be careful. I wait to see what’s left at the end of the year.


Don’t File Your Taxes Until You’re 100% Ready

Here is a checklist of everything you need to file your taxes. If you’re waiting on anything or are missing information, do not rush the process. Make sure you have everything you need in order to file.


Hire a Professional (and File Online)

It’s 2020. We live in an age of busy. No one wants to spend their limited down-time at a tax office. As a working mom with a side business, free time is something I don’t have. I hate to admit this, but math is not my thing. I would not trust myself to file my taxes correctly. Turning to a professional to help has been worth it. 



Make Notes and Prepare for Next Year

Even with all these tips, preparing for taxes can seem like a daunting experience. Make notes for next year and start preparing early. Set a reminder on the last day of each month. Go through statements, business credit cards (if applicable) and what’s coming in. Track those amounts monthly. By the time you’re ready to file next year, you’re a lot more prepared.