Taming Your Taxes with Evernote
Update: We've published a complimentary blog post (12 Reasons Why Evernote is THE Choice for Tax Management and Financial Organization for the Self-Employed) to this video.
Taxes are not the sexiest of topics, but the truth is that taxes - and the stress and anxiety that go along with preparing them - can be transformed into an efficient and paperless process, hours shorter than what most people experience, simply by adding Evernote to mix. In this #GetUntethered hangout, you see three case studies that feature Evernote as the star of the bookkeeping and tax process.
Special guest Chris Remus, of Tax Pain Relief, explains his system and offers viewers a 20% discount on his ebook using the code Untethered.
Original Air Date: February 2015
[4:48] Why Evernote for taxes?
[6:42] Case study: How Chris Remus uses Evernote for taxes
[22:45] Case study: How Stacey Harmon uses Evernote for taxes
[34:50] Case study: How Kristi Willis uses Evernote for taxes
[45:35] Special discount codes
[Stacey] Welcome to this edition of the Get Untethered Hangouts. I am Stacey Harmon and I’m here with my co-author Kristi Willis. Today, we’ve got a special guest which we will introduce to you to as well. Today we are talking about taming your taxes with Evernote. And it’s February and it's time to start thinking about how to ease the stress of taxes for April or October, whichever you pursue as a self-employed individual.
We have tips for everybody and in what we're going to cover today. We're going to go through three case studies. Kristi and I are both going to illustrate how we do, and then our special guest Chris is going to outline his philosophy for us.
I'd like to introduce our special guest Chris Remus. He is the author of Tax Pain Relief. We are so excited to have Chris here today. He approached us and we were like, “Oh, we are so like minded!” Chris is also a solopreneur who really works on technology operations, execution, product management, etc for companies.
You definitely know that the idea taxes was really dreadful; it causes a lot of stress. There is a lot of information that you need to gather. He spent too much time collecting all of his forms and receipts for paperwork. He actually documented his process because he used Evernote and a resulting system to kind of solve this problem for him and it’s called Tax Pain Relief. He’s going to give you an introduction to that process today.
Let’s address why we're talking about this. How many of you can identify with this picture where you know that it's February and you got all your 1099’s now it's like okay April 15th is looming… it’s just a headache, right? You might have paper, you might have shoeboxes of data, you have statements, you’ve got all this stuff and you have a looming deadline. It lingers in your world. If you're like us you also have clients that you're trying to service and worlds that you're trying to manage and personal lives and having a system is really something that can cause relief for all of this stress and make paper and problems that the idea taxes brings about. The fear of an audit, right? You can’t underestimate the importance of being prepared and having a system to be able to defend the tax situation.
Evernote has proved to be an outstanding tool to develop systems for all three of us and with that I’m going to let Christ take it over and show his system and share a little bit about why you have decided to write this PDF. Welcome to Chris!
[Chris] Thanks, Stacey and Kristi. Hopefully you can feel some of the relief I felt with this tax pain relief. Funny, as Stacey was going through the reasons that we're talking today I felt my heart beat a little bit faster, and as I look at slide 7, I can hear my anxiety start to build.
I thought I would get started this morning by talking a little bit what taxes used to feel like for me. This is what taxes used to feel like for me. That’s me, in the middle, with the huge headache. I think a lot of us may feel this way in some different shape or form, we have financial statements up on the top left, credit card statements and transactions in the middle, and then like Stacey mentioned, receipts here on the right.
I felt like I was doing a really poor job collecting the information, process it, get it to my accountant… inevitably asking me for more information because I always forget something and then again on the left you have Uncle Sam that you have to file to.
So this just really resulted in a lot of pain for me during tax time in the form of stress. This wouldn’t just happen in April or October, but all year round. So I decided something had to be done, and as a result, this is essentially what taxes feel like now. They feel better. You can see in the image; I started meditating and doing yoga, as you can see in the middle image. Rather than all this information bombarding me, now all the information is coming into this database that is in the middle. This database is a lot better suited for processing all this information and making sense of it.
As a result of this system, I'm getting my accountant, on the right, the information he needs when he needs it. On the left side, again, a bit of an exaggeration, I don’t think uncle Sam has ever thanked me for giving him money. What I’m trying to convey here is that, by substituting the database for my brain essentially I'm feeling a lot better about taxes in that getting the information my accountant needs to him in a format that is easier for him to handle.
After years and years of becoming pretty messed up through this pain, it was getting to a point where I was thinking, “I really like putting productivity systems in place, I like to automate systems as well. I’ve been using Evernote since 2008 and it occurred to me that there really has to be a better way to do this and doing this I can just make tax time easier. This year, in April, I was on the way out the door to vacation, and my wife works in a school. As a result, her vacations are pretty set in stone. For me, they usually coincide with tax deadlines. So I’ll find myself calling from my hotel room, talking to my accountant.
This year, once I had a system in place it literally took me about 30 minutes to get everything I needed to get organized, zipped up, and over to my account. Literally on the way out the door to the airport. I would say, conservatively that this would take up to 16 hours over the course of a few painful weeks. This took less than 30 minutes.
Here's how I did it, in detail. The first step, of course, is setting up Evernote. I set up two notebooks in Evernote: one notebook for my personal taxes and I set up one notebook for my business taxes each year. I think it’s good to have one notebook per business you manage. I let Evernote do what it's good at so I don't necessarily get into tagging, or have multiple notebooks for different types of documents. The key here for me that has really made this work is just making sure that I set up the notebooks, and that way the notebooks are there for me to use throughout the year and as long as I get the information into the notebooks, that’s about 90% of the battle.
Step 2, I begin to connect external systems, and I do this to help automate collection and documentation that I don't have to touch. For example here in step two, I use a system called FileThis, and if you’re not familiar with FileThis, it integrates with Evernote and it automatically pulls financial statements from banks, credit cards, other online retail accounts if you may have them, and pulls PDF statements each month related to your capital. Then adds them to Evernote notebooks. That's a nice way to automate the collection of financial statements so you don’t have to touch them. In a similar, with Expensify, I automate receipt collection generation for my expenses. So each month or quarter, I have an assistant go into Expensify, generate expense reports for the business, and one of the nice things about it is that it generates electronic receipts so you have a paperless copy of most of the receipts you need. For any receipts that weren’t generated, my assistant tells me what to keep, and I toss the rest.
Step 4, this part gets to be a bit manual. As we know, Evernote is really good at adding different types of documents and information into notebooks. This is where I start to get involved, anytime I receive a tax document throughout the year the first thing I do is make sure you get into my notebook. That’s either with the WebClipper, scanner, or by e-mailing the document to a notebook.
Finally, step 5: as I mentioned, you don’t see me yet in the picture, I do do some work getting the documents manually into the system. However, my assistant works with my bookkeeper in India on the left and they basically have access to Evernote and my notebooks, and depending on depending on what level of comfort on sharing sensitive data you to share with one or both. I personally, with my virtual assistant, I give her complete access, then she discerns what key information should be sent to India. Because of Evernote’s sharing capabilities, people are helping me get done what I need to do without me ever having to touch the process.
Finally there's I show up, late in the game. I really like the fact that I really don't have to get involved, despite my best efforts to procrastinate you know everything's getting done in the background when it needs to do. So this this system also helps me help myself, in a way. When I do get around to doing taxes, the information I need is right there, it’s more or less organized in the way I need and organized for the people that need it. By doing this, there was still a little stress this time, but nothing like the last time. My accountant now has what he needs, maybe even a little early.
Here's a quick rundown of the different tools that I use. I mention the scanner, there are a number of different mobile device applications you can use. I personally use DoxieGo as a stand alone hardware scanner for anything more than 5-10 pages that I might need to scan, otherwise, I understand Stacey uses Scannable that I’m excited to try. FileThis and Expensify I use to automate financial report and expense receipt collection, and then of course Evernote sits at the middle, making it all work. I also use QuickBooks and FreshBooks, and online banking that I haven’t quite integrated into the system but overtime, now that I have the foundation in place, I'm excited to deploy more functions into this and make it a hands off process.
[Stacey] Really good overview, of how Evernote plays an essential role. And I love the fact that it pulled you out of the process. That’s key.
[Chris] That has been one of the biggest sources of relief here. If I'm going to procrastinate, which I still do, when I get around to doing what I need to do, the information is there.
[Stacey] Talk a little bit about how what you just went through is expanded on in Tax Pain Relief.
[Chris] Essentially, there are three products: there is a quick start guide which I put together and I make freely available for people. Hopefully people can download and set something like this up for themselves. If you want to save a little bit of time, and not have to figure everything out yourself, there is the complete eBook, which walks you through step by step set up instructions and lists. It takes the guess work out of setting this up yourself. Finally, there’s a product that I put together, I'll sit down with you and walk you through the setup yourself. That’s intended for people like I was in that I knew what I had to do, I wanted to get the system in place and knew it would save my a hassle, but I wouldn’t do it. This third product, the guided set up, is for people who need a helping hand in actually taking the time to schedule it.
[Stacey] Moving onto my system, before we head to Kristi’s. This should be good a contrasting case study. You can see the similarities and the differences. A couple of things, I'm looking at like a holistic system and just a couple a details also… number one, Kristi and I covered receipt management in the book as well as a hangout from last year.
The approach I wanted to take to show you guys my system today was to talk more at the systems level, a more holistic level and show you all the parts and pieces that make up my bookkeeping and tax system. Much like Chris, a big part of my system is digitizing my work. I use the Scannable app. It’s an iOS app currently, only. It’s brilliant. It’s the best mobile scanning app I’ve ever used. I use it to digitize all my receipts and any paper that is a statement that isn't against digitized in one of my other manners. It’s a brilliant piece of software and I advocate highly downloading it now if you haven't done so already. I also like FileThis, Evernote’s e-mail functionality, and I signed up for e-billing to make sure that everything is digitized that can be digitized right from the beginning.
This section I have designated by just one icon to show that I'm not really sharing this part of my process with anyone in terms of permissions of people who access it. It’s on me. It’s very minimal as Chris has pointed out. It’s about the making sure that the process to set things up is feeding into Evernote. I also have invoicing and bookkeeping software. I use FreshBooks and iBank. Many people might use QuickBooks, it's certainly interchangeable you could do all these features in one piece of software. This is a collaborative role I use permissions to give other support roles access to my part the system whether it be a bookkeeper or my CPA.
Over on the right I have my banking services, which also play a role. I use my mobile bank app to deposit checks or transfer funds. If you have other account such as Pay Pal or Stripe, you have to keep in mind all the places that money is being house and flowing through. Bbased on business level tiers, I can have a bookkeeper or my assistant accessing those elements and e-billing again is that key element that I’ve made sure I’ve signed up for. These all talk to each other, but they also most importantly feed to Evernote. Within Evernote, I have a series of notebooks. I have more notebooks than Chris does and I'll show you those in a second. I have different permissions set for different notebooks depending on who I need to access what part of the process.
Some are just for my use, and others are for the use of my bookkepper and others I share with my CPA. This is kind of the overview and all of the things kind of ebb and flow to each other but the key element that is much like Chris, Evernote is my database that is in the middle up the process.
This is how I apply the four core elements of Evernote specifically to this process. The first is, notes, notebooks, stacks and tags. This is how its deployed in this particular workflow. So an individual note represents for me a single receipt statement or text document. I group those notes into notebooks, which I use to really track the phase or the status my bookkeeping process. I have multiple notebooks which tell me if something is like incoming or to be processed verses if it’s already been verified and reconciled. Ultimately if it's archived information for me; that's mostly in the receipt side of the process.
I then organize my notebooks into stacks and I tend to have two stacks. One manages ongoing bookkeeping on a day-to-day basis in another which is an archive purpose for tax reference. Then I do use tags, this is one of the processes in my system where I do use tags. This provides a role more a designating if receipts are either business or personal. Chris has two notebooks, I tend to have two tags: business or personal. It also allows me to quickly be tagged with questions that my bookkeeper has and I'll show you what that looks like in just a second.
This is a screenshot of my two stacks that I have, you can see I have a few more notebooks than Chris, but as he recommended, for different businesses, I have different notebooks. I have one for business, one for Untethered with Evernote expenses, and then for me, I’ve found that cash receipts were a bit of a stickler for me to track. I wasn’t doing a good job with that, Segregating those out helped me. They certainly don’t have to be. You'll notice that I have an incoming processed notebook name that allows me to track that it's something that's being brought into the system versus something that's being referenced in the tax archive.
I also again really want to point out that there's couple notebooks here Key and Questions. Actually, when we're dealing with a process where you have people that are integrating with you on it and collaborating with you it's really helpful to have documented systems and places to put questions. I designated a notebook that really helps me to do that. Taking it into a little more detail, this is an actual screenshot of my Raw Scans folder which is my first location that all of my data that needs the process goes into. I just wanted to show you the different ways that I apply those parts of the system.
The first thing is I obviously have a note here which is a receipt that has been scanned using Scannable. I actually photographed the receipt right there before I even left the store. The second thing thing is you can see my notebook structure over here which mirrors those, you can see the movemeny. They’re shared with different people. So my tax documents or my 1099 are the things that my CPA needs. He doesn’t need all my receipts unles there's a question or an audit. Third thing is I told you I use tags here and so we've got, in this case, my bookkeeper actually had a question for me. She wasn’t clear if this was business or personal, so she tagged a question and she wrote me a note here in the subject line. Now I can go back and do a find or a saved search for questions and answer them and clear them and move through the process.
That’s how I use the four elements to organize my Evernote around my taxes and bookkeeping. I want to focus again here on this Key and Questions notebook. I found one of the things that was holding me up was that I didn't remember the details about how I wanted my bookkeeping done, so I just decided to document them into a rules and an organization so I have a Google Wallet account. I decided I’m only going to use that for personal expenses. I wrote that down. It’s a training opportunity for my bookkeeper as well. I made notes about how I wanted certain transactions documented in my iBank software you know, and I wrote them up between general rules versus things I have to do at the end of every month, or what I want my bookkeeper to do at the end of every month as well as things that they need to have happened at the end of the year. Just centralizing these things in one note has been a great place to reference for consistency in data entry, especially as team members come and go.
The amount of documents that we track… the amount of bank accounts that I’m tracking… especially in the modern world where we're taking online payments for various things and all the sudden and I have PayPal and Stripe and SquareUp and my bank and it’s just like oh my gosh how am I supposed to track all of this?
So I made this table in Evernote that documented all the places that I needed to make sure to have reconciled receipts and you can share this with your bookkeeper, or for your own tool to kind of keep up on your management throughout the year. This one document made a huge difference in how comfortable I felt knowing where I was in the process and minimizing the amount of stress I feel right before tax time.
You can keep up with it and know where it's at throughout the year. That's my overview system, I put this table together just to show you what tools I use throughout it and what role those play in the process. As you saw, Chris adapted that for his system. Now you have an apples to apples comparison. Kristi has done the same. Then in terms of scanning, I actually have converted entirely using Scannable and have no need to use anything that is a more physical piece of hardware than that. Other than that, it's all covered in that chart.
[Kristi] As far as notebooks go I have a few more notebooks than Chris, but fewer notebooks than Stacey. I’m Goldilocks today. I also use some different tools, like Chris, I do use Expensify. I’m also using Zen payroll to pay my part-time employee. I use FreshBooks for my invoicing and bookkeeping. Keeping up with all my expenses and things through there as well. I'm digitizing also with Scannable, which I love, and is a great app. I do tend to get more paper than Scannable can really handle for me, so I am still using a physical scanner. After installing the Evernote ScanSnap for a client this week, I am getting one for myself. I also digitize by emailing things to Evernote as well as I recently set up a rule in If This Than That that I’ll show you in a minute. It looks to my email for anything that says receipt and sends it to Evernote as well. It’s my back-up to make sure it all gets in there. Like Stacey, I’m using PayPal, Square and some other things to collect money from folks.
As with everything in my life, my sole goal is to get it into Evernote. From there, I know I'll be in good shape. If you partipated in our expense and receipts hangout last year, some of this may be a little bit of review for you. I am using Expensify to do a couple of things. I use it to pay employees expenses and I also use it to track my mileage. There’s a map feature in it that helps me keep up with that.
For example when Lillian has receipts that need to be reimbursed, she enters them into Expensify. Then it emails me a report that I can pay electronically. Then I can export the expense report Evernote so that I can have it for permanent reference. This is just another example of what that looks like this is for me; this is the mileage report that I send myself every month. Again I really like the format of the mileage, the tracking, the fact that I can put in two destinations in the map and it'll figure out the mileage for me.
A process that I just recently started using… I just needed something as my sort of my last resort. Let’s make sure we got all these receipts into Evernote. I'm pretty good about emailing them into Evernote, but sometimes I miss one, so I love If This Than That. I saw that somebody else had a recipe on there to e-mail receipts into Evernote and I thought that was genius! That make sure that anything that has the word “receipt” in there ends up in Evernote. Sometime it does things I don’t want, but for me I'd rather delete notes then them not get in there. I have them go to my Inbox and I just clean my inbox there.
I also, like Stacey, use a multiple notebook system. I put my receipts that need to be reconciled in a notebook that I brilliantly named Receipts to Reconcile. You'll notice that I use the dot at the beginning so that it would sort up to the top of my notebook stack. Then I go through that notebook once a week and I cross-reference that with FreshBooks and go through and make sure that the receipt is in there. If not, I will go add it. I categorize it in FreshBooks and then I tag it with the same category in Evernote. I've then move that note to my notebook or that year of all my receipts for that year. I have different tags for my personal verses my business receipts, so I just put everything in one notebook rather than split it up.
That works for me. Depending on where you live in Texas, we don't pay as state income tax so I don’t need a separate notebook for those things, but for some people they want their personal and their professional split up. I just use the tag system to do that for me. So note comes into that Receipts to Reconcile I cross-reference that with FreshBooks, categorize it, tag it, move it to the annual receipt notebook.
Then I also, if it is something that's available to a client, I have a tag for that in Evernote. So I can keep up with those and then I make sure that I am assigning those to the client in FreshBooks and that way when the client pays the bill I can see that that's been done and of course then I can move that to you that year's tax notebook. Like Stacey, I’ve got a tool overview. I am using Evernote Scannable and the portable Fujitsu ScanSnap, but I am getting that Evernote ScanSnap. Then I use If This Than That to help me collect receipts. Evernote is where everything goes, using those online banking tools. I can produce reports and send those to Evernote. We’re using FreshBooks for client invoicing, expense tracking and time tracking and then Expensify for keeping track of expenses and mileage tracking.
[Stacey] I love the mileage thing with Expensify. That solves a problem. I’m curious if you Chris tracks his mileage? For me, I created a table in Evernote that is kind of a mileage log basically because I can pull that up on my phone when I reach my destination. It’s a really manual process and I like the fact that Expensify offers you a more automated system.
[Kristi] Expensify has an app as well so that you can do things on the fly. I try to remember to do that during the week, but the process I have for myself, in on Fridays I go through and make sure that everywhere I went that’s in my calendar is entered into Expensify. In Texas we’re in the car a lot, but for those of you that are like “Why do you track mileage? I walk everywhere!” I just use that to double check it and then at the end of the month I export a report. I love being able to just put in the two-points and have the map attached.
[Stacey] Chris how do you track mileage? Or do you?
[Chris] I fall into the category of people who walk most places!
[Stacey] You’re so lucky!
[Chris] In the past, when I can’t walk, I take a taxi or Uber or another car service like that. Rather than mileage tracking, I’m expense tracking with the receipts. I like Kristi’s idea of using IFTT to automate the sending of the receipts from G-Mail. Like the Uber receipts moving right into Evernote. Right now I do that manually.
[Kristi] What happened is I knew I had a receipt, I went into Evernote and I’m like I guess I didn't save it in here… and at that point me trying to dig through G-mail was a pain. I just needed a catch all. I’d rather have multiple copies and delete one than not have it in there.
[Stacey] Hopefully you found some great value in seeing 3 really distinct case studies that have different variables. We've got Kristi that’s actually paying employees and has to track that and use different softwares for that. Chris and I are managing our processes in slightly different ways as well. You can also see though that is common in all of these is that Evernote is the middle.
[Kristi] Get it into Evernote!
[Stacey] Once it’s digital you have this trusted system that’s in the middle that you can share with people throughout the taxes season and retain a digital archive that really makes all of this as Chris has captured: pain free.