Just like our last few blogs, this week’s musings center on spring. That beautiful time of year when the fancy of a young man (or lady) turns to love, cherry blossoms and…tax returns?! It’s all a big springtime paper chase, my friends, but one we can win.

In both my current role with Orgwide as well as in my prior life as a CPA, I have worked with many amazing business leaders—smart, organized, prepared (I know, this sounds like you)—who went into an absolute panic around this time every year. And universally, this panic was caused by a lack of planning—the same planning that all of us do each and every day in our jobs. Why should filing a tax return be any different? I propose to provide a process with which you can approach the dreaded filing and come away smiling (or at least not cringing and crying).


Preparing those tax forms requires exactly the same approach as any other project. Let’s be a bit formal for a moment and lay out a “DPIE” process. And no, those letters don’t present “Dodge, Panic, Irritate, Endure” but instead denote:

1.  Define the Problem
2.  Plan a Course of Action
3.  Implement with Confidence
4.  Evaluate and Adjust

1. Define the Problem
Contrary to what you may have heard, the IRS is not out to get you. Well, they are out to get a share of your money, and that outstretched hand (and accompanying form) will be extended every April 15 until you die. (The certainty of death and taxes will require a separate column.) It’s no good fighting “the man”, let’s just acknowledge that we must gather information, complete a form, possibly attach a check, and send it on its merry way. Voila—a plan! Now, what to do with all those bits of paper…

Unlike many business challenges, this one has only one possible outcome (barring life on a remote island). So the goal is simple: organize the information to facilitate easy preparation of the forms. But the approach that we take to the inevitable filing—ah, the possibilities! It really depends on the complexities of your situation as to whether you prepare the forms yourself or solicit the help of your friendly local CPA. Either way, the next step will come in handy.

2. Plan a Course of Action
I once had a client who would annually deliver all of his receipts in a used, slightly crumpled McDonald’s bag. In addition to smelling like old French fries, the contents were a jumbled mess. Another time, I visited a new client’s office; they needed help “organizing a few letters from the tax authorities.” This actually meant digging through a row of file cabinets that were crammed full of documents they had been ignoring for three years! C’mon, people, you can do better!

To organize my own information, I use a very complicated system that involves:

- Two (2) manila files
- Assorted paperclips

Go through your desk drawers, briefcases, glove compartments, unopened mail bearing the stamp “Important Tax Document” and wherever else you stash your treasures and gather every one into a large pile. Find a quiet space in which to work and lay your papers, folders and paperclips in front of you. Label one of the folders “2010 Taxes” and set the second one to the side.

3. Implement with Confidence
Keep in mind that most exercises related to money can be divided into two simple concepts:

- Cash that comes in (income)
- Cash that goes out (expenses)

Your first task to is take all of those bits of paper and divide them into those two big piles: anything related to Income (your salary, investment earnings like interest and dividends, tax refund checks, rental income, partnership income) and Expenses (mortgage  payments, tax payments, donations to charity, medical expenses, etc.). The next step is to go through each pile and group together all of the like items—all W-2’s for salary, all 1099’s for interest and dividends, all 1098’s for mortgage interest, all the Goodwill receipts for donations—and use those little paperclips to hold together all the like types of receipts. (If you are really enjoying this, you might employ a color-coding scheme, green paperclips for Income and red ones for Expenses.)  Finally, take your paper clipped files and place them in the “2010 Taxes” folder until you are ready to work on the forms.

You might be left with a few items where you are not certain into which pile they fall or whether they even should be included—but having to research that little pile is a lot less frightening than staring at a big, unruly stack of paper.

You have just fought and won 50% of the battle. When it comes time to actually fill out the forms or turn over the information to your CPA, you will be amazed at how this simple activity will streamline entering the information on the form.

4. Evaluate and Adjust
Admit it, you’re just dying to know how to use that second manila folder. See Step 1. above about this paper chase occurring every year. Most of the anxiety people feel around the whole process relates to not really knowing where the information is so let’s test the effectiveness of the process by getting a jump on next year’s taxes.  Label that second folder “2011 Taxes” and use it throughout the year. Resolve right now that every receipt that might be needed will go into that file the instant you receive it. No more mad  scrambles and late nights for you! If you are feeling really frisky, grab two of those paperclips and separate Income and Expense papers as you go.

When March 2012 comes along, the paper chase will feel less like a race and more like a stroll amongst the cherry blossoms.

Karen Bean is a recovering CPA and Orgwide’s Vice President of Customer Sales and Support. In addition to assisting clients with their “organizational” challenges, she teaches E3 (Exemplary Customer Service) methodologies. Visit www.orgwide.com for more information.

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