3 Tips For Keeping Proper Tax Records & The IRS Off Your Back!
1. Keep the receipts!
2. Write your cash flow!
3. Learn to save on your Taxes!
People don’t usually think about doing taxes when starting a business. However, proper tax planning will make
preparing your taxes a lot easier, it will also keep the IRS off your back!
1. Keep the receipts. Whenever buying something for the business, save the receipt!
Doing so will make record keeping much simpler, and if you are ever audited (getting your income tax return checked by the IRS), you will be able to show prove of your expenses, and save yourself a lot of money.
2. Write your cash flow. It means keeping records of all your expenses and all of your income.
While your business grows, you will have more activities added to your calendar everyday. Most people lack the time and the will to begin organizing their records for the year on April 15. Therefore, it’s best practice to write down all your expenses and all your incomes as they happen throughout the year. You will learn that preparing your taxes will take a lot less time and effort whenever you are well organized.
3. Learn to save on your taxes.
Learning about your taxes, will help you find many deductions (expenses that reduce income, and taxes) that can save you thousands of dollars every single year on your taxes.
You might be able to deduct office expenses when using your home office, business related repairs you make around your home,
utilities, your home’s value when you started your business, and much more.
The more you learn about your taxes, and the better organize you keep your records; the more time you will have and the more money you will save at the end of every fiscal year!
What happens when you don’t keep records properly?
People with small and medium sized businesses are the most probable to get their tax returns
audited by the IRS. If you don’t have your receipts, you will most likely lose
any deduction without receipts and owe money to the IRS. While audits do not have to
be feared, you should always be ready, the better organized you keep your records,
the easier it’s going to be to prove your case. Make sure you have a file cabinets or box with and create your filing system.
Organize all your receipts in properly labeled folders, and keep them in a secure place.
Another way to save time is to record business transactions, expenses and all income sources on an Excel or Google spreadsheet. You will at least need to keep a column for income, marketing, supplies, etc. You don’t need to be a spreadsheet or computer expert. However, keeping correct, ans well organized records will save you time when
filing your taxes every year. Plus it will help you plan your business better, by
giving painting a picture of your financial progress anytime you need.