When starting a business, the last thing that most people think about is doing taxes. If you are looking for an easier way to do your taxes and keep the IRS happy, then you need to have proper planning.
Here are 3 simple tips for keeping proper records.
Keep the receipt whenever you buy anything for your business.
You will be able to make record keeping a lot simpler but aside from that, you can prove your expenses and save yourself money if you are ever audited (having your tax return reviewed in detail by the IRS).
Writing down all your expenses and income as they happen is a must.
You will have more and more activities to keep you busy as your business grows. Each April 15, the last thing that you will want to do is organize your records for the year. Another good idea is for you to write down all your financial activities as they happen. What you will realize if you are organized is that preparing your taxes will take much less time.
Learn how to save money on your taxes.
As you learn about taxes, you'll find that there are many deductions (expenses that reduce your income, and therefore your taxes) you can take that are not obvious. When using your home office, you may be able to deduct (at least partially) repairs you make around the house, utilities, your home's value at the time you start your business, and more.
If you know more about taxes and you are also more organized when it comes to keeping records, then the more time and money you'll save at the end of every year.
If you don't keep proper records, what happens then?
The most likely to have their tax returns audited by the IRS are the individuals with small businesses. If you don't have a receipt, you will likely lose the deduction and owe the IRS money.
You should also be prepared while an audit does not have to be feared since the organized your records, the easier it will be to prove your case.
If you don't have one, get a file box and some folders at your local office supply store (these supplies are deductible, so keep your receipts!) and create a filing system for your business. Make sure that you put all of your receipts in the proper folders, and put them in a safe place.
Trying to record all of your business transactions, such as income and expenses, on a spreadsheet on your computer, is another way to save yourself time. Be sure that you keep a column for income, advertising, supplies, etc. There is no need for you to be a computer expert. If you keep accurate, organized records, then you will be able to save time when you fill out your taxes at the end of the year.
And by giving you a snapshot or your financial progress whenever you need it, it can also help you plan.
This may then come in handy when you need to place ads, borrow money, or even take a much needed and well-deserved vacation.
Here are 3 simple tips for keeping proper records.
Keep the receipt whenever you buy anything for your business.
You will be able to make record keeping a lot simpler but aside from that, you can prove your expenses and save yourself money if you are ever audited (having your tax return reviewed in detail by the IRS).
Writing down all your expenses and income as they happen is a must.
You will have more and more activities to keep you busy as your business grows. Each April 15, the last thing that you will want to do is organize your records for the year. Another good idea is for you to write down all your financial activities as they happen. What you will realize if you are organized is that preparing your taxes will take much less time.
Learn how to save money on your taxes.
As you learn about taxes, you'll find that there are many deductions (expenses that reduce your income, and therefore your taxes) you can take that are not obvious. When using your home office, you may be able to deduct (at least partially) repairs you make around the house, utilities, your home's value at the time you start your business, and more.
If you know more about taxes and you are also more organized when it comes to keeping records, then the more time and money you'll save at the end of every year.
If you don't keep proper records, what happens then?
The most likely to have their tax returns audited by the IRS are the individuals with small businesses. If you don't have a receipt, you will likely lose the deduction and owe the IRS money.
You should also be prepared while an audit does not have to be feared since the organized your records, the easier it will be to prove your case.
If you don't have one, get a file box and some folders at your local office supply store (these supplies are deductible, so keep your receipts!) and create a filing system for your business. Make sure that you put all of your receipts in the proper folders, and put them in a safe place.
Trying to record all of your business transactions, such as income and expenses, on a spreadsheet on your computer, is another way to save yourself time. Be sure that you keep a column for income, advertising, supplies, etc. There is no need for you to be a computer expert. If you keep accurate, organized records, then you will be able to save time when you fill out your taxes at the end of the year.
And by giving you a snapshot or your financial progress whenever you need it, it can also help you plan.
This may then come in handy when you need to place ads, borrow money, or even take a much needed and well-deserved vacation.
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