IT'S coming up for the time of year when you find yourself going on an archaeological dig through drawers and cupboards and heaps of papers searching for everything you need to fill in your tax return. It’s a potential nightmare, and a burden that looms over you every year if you work for yourself – or even if you don’t.
Bank statements, municipal bills (if you’re working from home), phone bills, restaurant slips, unopened mail, petrol slips, receipts from computer supplies – the list is endless. But if you work for yourself and you want to claim for any work-related expenses, you have to find and keep these things together.
Not everyone is super-efficient with administrative skills. Here are some bare basics on how to keep this process as painless as possible:
Don’t throw anything away. Or at least, nothing dated for the tax year you still have to claim for. If you know you don’t discard any documents/mail/receipts, you know that at least if you search long enough, you will find everything you're looking for. You can chuck stuff out much later – but wait to hear whether you might be audited by the taxman first.
Keep all of this in one room. The last thing you feel like doing is hunting through shelves, bedside tables and heaps of papers in the kitchen. Even if you don’t deal with the incoming mail/bills/paperwork immediately, just put it all in one place. Not everyone is super-organised with labelled box files.
Do a weekly round-up of receipts. Receipts in your wallet or the cubbyhole of the car or your bag are likely to go missing in the everyday rollercoaster of life. Certainly after a year you will no longer be able to lay your hands on them. Don’t keep petrol receipts and car repair receipts in the car.
Cars can get broken into or stolen, and then you have no record of your transactions, especially if you paid cash. And get into the habit of recording mileage and petrol expenses in your diary (or send yourself an email from your cellphone with the details) if you want to claim for travel expenses. You won’t remember these trips later.
Buy a large box and a couple of large plastic clips. If you’re not the super-organised type, dump all banks statements and bills and receipts into this box – even if they’re still in their envelopes.
You can sort through them later. If you are feeling virtuous, you can open all of these, and clip them together in the correct date sequence – all the bank statements together, all the phone bills, etc. Or even put each type in a separate little labelled box – but not everyone is quite that efficient.
Keep a diary. This may sound old-fashioned, but records kept only on a laptop disappear if the laptop does. Buy a small diary, and get into the habit of taking five minutes per month to jot down what your tax-deductible bills for the month were on the day you pay them.
Never let the diary leave the office. In that way, the only way you can lose it is if the house burns down.
Desktop spreadsheet. Also record this same information on a standard spreadsheet saved on your desktop for easy access. Update it monthly, not once a year. By that time you will have forgotten many of the things you wanted to claim for, or forgotten all the important, but necessary, details. It’s handy, but keep in mind nasty things such as computer viruses that wipe out our documents. Back up your files.
Get a tax adviser. There are few more joyous things than mailing your spreadsheet to a tax expert and letting them do your returns for you. They know what you can claim for, and you will almost always be able to get more back from the taxman – or pay in less.
They will go to the South African Revenue Service for you and stand in queues. The one year I tried doing my taxes on my own, I ended up paying in a huge heap of money. The fees for the tax expert are almost always covered by refunded tax in my case. This is so worth it.
Print out bank statements. Sometimes it is difficult to access bank statements online further back than six months. And even if you can, it has happened to me that the one month I really needed, was the one that wasn’t in the archive.
Bank statements provide you with a heap of information you need to do your taxes. Some people always use a specific account or debit or credit card to pay all their work-related expenses. Then everything is in one place in your records and easily accessible.
Jot down in your diary the tax you’ve already paid - as you pay it. Even if your tax adviser can pick this up off the system, there might be payments you have made that go missing. No system is infallible. Bank statements only show what you have actually been paid, not whether tax has been deducted. Keep a record of invoices you send out.
Set a day aside for this. This is not a job you can do in between lots of other tasks. It needs concentration and focus. Don’t leave it till the last minute either, as this will increase your stress levels. Find out what the due date is well in advance, and give yourself a bit of leeway.