Tax time

I hear people talk about tax time with a sound of dread.  Maybe I'm just the odd ball, but I really don't mind tax time.  For one thing, with our farm it almost always means some sort of tax return.  The big thing is to be organized (though it likely also helps that I like math :) ).

All year around I stay organized for taxes.  Well, I admit our first year with our farm it was a mess.  It was terrible.  But from there I decided I had to be organized.  I took that years tax form, and made an envelope for receipts for each category.  Now when I spend money, I throw the receipt in the right envelope.  For example, I buy grain for our sheep, once I get home that receipt goes into the "feed" envelope.   I have an envelope for "fiber and yarn sales" and so forth.  Every sale and expense has an envelope to go into. When the year is over, I add up the contents in each envelope.  Not hard at all.

Our accountant sends us an organizer each year.  I plug in the totals from each envelope on the right line.

Our envelopes:

The organizer the accountant sends us:

I plug in the numbers (he has last years numbers there for reference, so I can glance if they are similar and if not, I can usually figure out why).  Then I put sticky notes if I have any questions.

We go in for a yearly one time meeting with the accountant to go over the organizer.   The accountant e-files it.

That's it!!

With a farm I think it's important to make sure the person doing your taxes has experience with farms.  There are different things you can claim due to having your own business.  While it costs to have them prepare it, their experience saves us money in the long run.