I've tried some embarrassingly sloppy 'organization' systems for ALL THE PAPER that I need to keep track of. I had a child's rubber boot in my vehicle stuffed with receipts, I wrote 2017 - 12 STREET ROAD on a ziplock with sharpie and shoved my unopened rental property mail in there, and I've just thrown my mail on the kitchen table and let it accumulate there until we had to eat every meal at the kitchen island. ALL THE PAPER that comes with running a household + real estate investments is no joke. It's overwhelming. So what I've done is created this Cut the Paperwork Clutter system - to get started with the 1st step - get the 'what to keep / what to toss' Checklist.
Cut the Paperwork Clutter is simple, easy to follow steps to get your paperwork organized + tidy. No more receipt explosion. Never question if you are missing a deduction. Make tax time easy. My main goal was that the system had to be something I could start right away (no fancy software or office supplies needed), has to track what's important, easy to implement and makes information easy to find. I'm THE WORST for putting things in a 'safe place' never to be found again.
#1 what to keep, what to toss
You have to keep everything that tracks the income + deductible expenses associated with your property. In addition to your deductible expenses (also known as current expenses), you should be keeping record of capital expenses. These aren't costs you can deduct for tax purposes, but they are added to the value to your property. THIS free helpful CHECKLIST is the 1st step in the system and goes over the specific receipts and documents you should keep or toss.
how to organize
Now that you know WHAT you need to organize, let's talk about HOW you are going to tidy it all up. For all the paper documents, receipts, invoices, policies, bills, contracts, etc. you have to decide between two organization systems; paper system OR a paperless system. The best way to decide which would be best for you + your family is to address the pros and cons and pick the system that you think will be easiest and practical for you to stick to.
If you already get pretty much all your important 'keep' documents via paper, a paper system will be easy since you can skip the whole scanning/uploading step. If you don't have access to a printer to print the documents you receive electronically, a paper system will cause things to fall through the cracks and you will miss deductions that you are entitled to. Make a list of pros and cons like those mentioned.
If you have a smart phone, scanner or receive most of your 'keep' documents via email/online, a paperless system will be easy to implement. If you don't like the idea of storing documents online, than this isn't the system for you.
where to file everything
Now, depending on HOW you are going to organize; paper vs. paperless, you need to setup a system for WHERE you will 'put' everything. If you've chosen the paper system - you are going to have 1 binder for every property. In each binder you will have dividers for every important deduction category + income source. There are some 'things' you will need, like: binder, printer, hole puncher, paper. I suggest downloading this FREE deduction overview page and using it as a base to what your dividers should be.
If you decided that a paperless system would be a better fit, you will also need some 'things'. Like a scanner or smart phone to make any paper documents electronic.
By getting started with the 1st step (getting the 'what to keep / what to toss' Checklist) I will be in touch over the next few days. I will walk you through the actual process of setting your filing system, depending on what type of system you've chosen (paper system or paperless system).
In addition to the what, how and where of the Cut the Paperwork Clutter System, there are 3 rules you have to start TODAY. The problem with the 3 rules is they are going to go against your human nature. You aren't going to think following these rules is going to matter. But THESE RULES ARE KEY and if you can resist the temptation long enough (probably 6 or 7 days) they will become habits.
The Rules You Promise to Follow:
Don't open your mail until you're ready to deal with it
Store everything vertically (no more piles)
- whatever system you decide to go with (paper vs. paperless) you have to be ALL IN no some paper + some emails. ALL paper or ALL paperless.
It's time to clean up the mailbox explosion. Put away and stop having to stare at the Master Paperwork Piles you've created on your kitchen table. Let's get started with the 1st step - get the 'what to keep / what to toss' Checklist and then over the next few days we'll move through the Cut the Paperwork Clutter system together.