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Systems for Paper
Organising financial documentation
Kyla wrote to us wanting to know how she can get her finances under control and organise her paperwork for tax time - this year and beyond.
Q:
Help! I am drowning in a sea of receipts and piles of paper with no system. I really need to get this under control so I can do my tax. Please tell me how to do not only for this year, but next year too.
Kyla Morgan
A:
No problems Kyla, you've come to the right place. Many of us delay preparing our tax return because we have no system in place to manage the paper trail. Whether it's personal or business tax, don't make the same mistake again this year. Get organised now! Here's how:
Top tip #1: Help yourself by making sure all your financial documentation in one place. It doesn't matter where you choose; office, cupboard, desk drawer or shoe box, just make sure your paperwork has a HOME.
Don't make the mistake of having multiple homes... you will waste countless hours trying to locate all the elements come tax time. Once you have everything in the one place...
Top tip #2: Segment your papers into different categories:
-income; group certificates, payslips, any shares, investments, interest etc
-bank and credit card statements; include cheque buts, deposit slips, on-line transfer or phone banking receipts
-store cards and loyalty programmes
-outgoings; paid bills, receipts, any expenses that might be claimable (a good bookkeeper or accountant can advise). Don't forget donations to charity, health insurance documentation, your motor vehicle log book and any other travel expenses.
When you have your categories...
Top tip #3: Create a lever arch folder with dividers according to the above segments. For existing paperwork, take one section at a time and place each piece of paper in date order, with the most recent record on the top. For example, your bank statements, if issued monthly, with have 12 records, June 04, May 04, April 04 and so on.
Having a folder like this is a perfect opportunity to get your superannuation better organised. If you have more than one account, take the time to roll into a primary account. Super can be quickly depleted with administration fees, so save money by rolling. Of course, one account is a hell of a lot easier to keep track of too!
The beauty of this folder system is that once it's established, it's really simple to upkeep. The most recent paperwork gets hole punched and placed within the relevant section on the top. So you don't actually have to sort anything into date order, it happens as you go. At the end of financial year, you can hand the whole shebang to your tax professional for super-easy processing. Nice one!
But what about those annoying little scraps of paper? I hear you ask...
Top tip #4: Manage the finer details. As you collect receipts, use a highlighter or pen to circle the date of purchase, supplier and amount paid. If it's not clear what the receipt is for, write that on the receipt too. If you are self employed or run a business and use multiple bank accounts and/or EFTPOS, it's a good idea to indicate which account was used. Might sound obvious, but a receipt with not enough information can be forgotten after a week let alone a financial year! Highlighting the important information makes it stand out and you won't need to revisit everything on the receipt (some companies have 20cm long receipts and it can be confusing at first glance).
Stickytape the receipts on a piece of A4 paper in date order for easy handling. If it suits you, have a different page for each category; eg, stationery, travel expenses, reference materials etc. You can also apply the same method for managing ATM receipts, deposit slips, etc. These A4 sheets will neatly slot into the folder you've created.
Creating order in your record keeping will save you bundles when it's time to go to the bookkeeper or accountant. Time is money and you will pay the price if you hand over a shoe box of receipts! Someone will have to make sense of the disorder, and you'll have to pay for the privilege.
Most importantly, now you need to...
Top tip #5: Maintain your system. The more frequently you sort your paperwork, the easier things will be at the end of financial year. So try and file as you go. Make emptying your purse or wallet part of your routine! Personal record keeping doesn't have to be a weekly chore - even spending a few hours once every month or so is effective. Sure beats the stress of scrambling to gather and order everything when the tax office is on your back, or you're due a much needed refund.
At the end of financial year, double check you have all the documentation you need. Are you missing a group certificate or tax invoice? Make a phone call now to chase it up. What's your tax file number? Where's the phone number of your accountant? Have you gathered together all your receipts?
Archive old financial documentation (old tax returns and supporting paperwork) in a sturdy box out of your day to day space. Clearly label the box and you're super organised.
Good luck!
Lissanne Oliver
Organiser Extraordinaire
