We are halfway into March. How are your tax record books looking? You must maintain a complete and organized set of records for tax purposes. This is one of the most important aspects of your small business bookkeeping. This not only lets you optimize tax deductions, but it also helps streamline for auditing purposes and it prevents costly tax penalties. The experts at SmarTax, LLC are here to simplify your business tax record keeping. Trust us when it comes to business bookkeeping. We are known for being the best tax accountant near me.
Back to Basics
Here are some points that the IRS advises you should keep in mind when you organize your tax records:
Documents supporting income, deductions, or credits claimed on a tax return must be kept until “the period of limitations” expires on that return. This varies but refers to the period of time after filing a return during which you’re entitled to submit an amendment, and they’re entitled to assess additional tax.
It is a good idea to keep copies of previously filed tax returns with your original documents. Not only will they help in the preparation of future returns, but they’ll also provide ease of reference should you need to file an amended return.
Even when your records are no longer required for income tax reasons, you may still need to keep them for insurance or loan purposes.
When you are being audited, there is a burden of proof for any tax-related claims that lies with your business. You must make sure you have the necessary records to back up those claims. They need to be complete and easy to access. You need to resist reporting deductions without proper supporting documentation.
Small Business Bookkeeping Documents To Be Aware Of
Source documents are the key to both simplifying your business tax record keeping, and being able to substantiate your expenses and income. To that end, it’s vital that you set up and enforce policies and procedures in every area of your company to ensure essential documents are being gathered or generated.
Here is a brief look at some of the most common sources of tax-related documents:
- Business income
- Regardless of the source, however, to prove business income you’ll need a system that allows you to track and manage company sales invoices and receipts, cash register tapes, bank deposit slips, fee statements, and client contracts.
- Business expenses
- As the biggest source of tax deduction claims, the records supporting your business expenses demand careful attention. Documentation should identify payees and payment dates and amounts as a minimum.
- Electronics Transactions
- It goes without saying that many of today’s commercial transactions are conducted electronically. If you make purchases or pay bills with credit cards, debit cards, or electronic fund transfers (EFTs), the statements issued by your bank and other financial institutions can serve as source documents.
- Employee Payroll
- When your business employs other people, your record keeping obligations increase as a result of having to report, withhold, and remit accurate tax amounts to the government on your employees’ behalf.
Call Our Tax Accountant Near Me
We have all the information regarding small business bookkeeping. Our tax advisor wants to ensure you have all the info for tax preparation. The professionals at SmarTax, LLC.want to ensure that you have all the information you need going into tax season this year. It is essential to be aware of all tax laws as they may affect you. For further information call or contact us today, Pembroke Pines. We offer the best tax accountant near me.