To be sure that you are prepared for tax time or in the event of an audit, it is vital that you effectively manage and maintain your tax records. Every year at the end of the year, I take a look at how I have been keeping track of my business income and expenses for tax purposes.
In fact, I perform a personal audit by reviewing my bank statements, check books and reviewing the receipts that I have filed away in my records.
According to the Internal Revenue Service, after you file your tax return you will have many records that may help document items on tax return. Moreover, you will need these documents in the event your return is selected for examination. Here are Four easy ways to manage your record keeping:
1. Use manila folders or 3-ring binders to keep track of business expense and tax records for the current year. Be sure to create a folder for: income, business expenses, payroll, quarterly tax returns, Business loans,etc.
2. Store a way all old tax and personnel records and keep them for up to 10 years.
3. Store all personnel and records with sensitive information such as; social security numbers in a locked file cabinet.
4. Get a back-up system and invest in a computerized bookkeeping software to keep track of your income and Business expenses.
For more record keeping tips, click here.
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Filing your Business taxes is a Big chore every year!
I know because I’ve been filing my own taxes for the last 16 years as a Business Owner.
In fact, I have found that when you are organized with your record keeping throughout the year; it makes it easier for you when it is time to file your taxes.
If you enter all of your income & expenses into a computerized accounting program; you have already made it easier on yourself.
However, if your record keeping is manual and in written form, you have a ton of work to do to get ready for the upcoming tax season.
Here is a strategy that has worked for me and it helps me to organized my receipts in categories. Create a folder for items that you can claim on your tax return, including:
- Classroom materials and equipment
- Employee incentives and events
- Business Events
- Professional Development
- Food for the Children
- Your Lunch Receipts
- Massage and Medical appointments
- Car or Van Expenses
- Marketing Expenses
- Office Supplies
- Building maintenance or home repairs
- Cell phone bills (must be used for Business)
For more Tax preparation tips, Check out this blog post to get some record keeping ideas for 2016, click here.
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