Making New Years resolutions for your business for 2013? If so, put this one at the top of the list:
"I resolve to keep excellent records in my business this year."
Before I discuss what to do, here's an article from PDXCPA describing what NOT to do, like:
- Throwing everything in a shoebox and handing it to your tax preparer
- Or giving your preparer your bank statements and saying, "Here's everything you need."
- A handwritten summary of expenses with no backup
- Mixing your business and personal transactions
- and you get the idea.
Your business financial records must be:
1. Complete. All income and expenses must be included.
2. Detailed. The IRS wants to see details, particularly on expenses. The "who, what, where, why, and when," so to speak.
3. Organized, so your tax preparer can find everything, so no tax-saving deductions get missed.
4. Timely. Records must be created at the time the business expense happens, not at the end of the year.
5. Business-related. You can't deduct personal expenses as business expenses. If you mix business and personal expenses, your tax preparer will have to go through everything in more detail, to take out the personal stuff. This means more time, and money for tax return preparation.
Putting this resolution at the top of your "to do" list for the beginning of the year can help you save money on taxes and lower your stress level at tax time.
Learn how good records can save on business taxes.
Start with this article about 5 steps to a business record keeping system that works.
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