Are Your US Business Tax Records
Up to date?
Many Home Based Business enthusiasts forget
the importance of accurate Business Tax Records
The following 6 Steps to setting up Business Tax Records should be followed by all entrepreneurs, especially the Home based Business person
Is the accumulation and separation of your Business Income Tax Records a pleasant experience?
If not, here is a list of 6 important “boxes” to keep your records and a FREE reference on HOW TO be eligible for more deductions than most consider, and highly recommended, affordable, record keeping software, designed for the Home Based Business person.
Following are the 6 Business Tax Records everyone should keep current, followed by a few that would be needed if you took full advantage of all of the possibles avenues of Business Income Tax Deductions:
- Gross receipts. These reflect your business’ income, on which its taxes are based. Save documents that show the amounts and the sources of the income. Those run the gamut from cash register tapes to receipt books. Also with some NEW 2010 Tax Law changes remember to keep accurate record of your GROSS income from Paypal and other payment processors. It will be incumbent to keep track of ALL sources of Income. Paypal wil be reporting to IRS all transactions exceeding 2,000 per year and/or $20,000
- Purchases. These are the things you buy and resell to customers. They include raw materials or components that are included in finished products. Such purchases may be considered part of the cost of goods sold, and be eligible for a tax deduction. Also remember to audit your Paypal and other processor accounts.
- Expenses. Expenses are the costs of running a business, from salaries to rent to travel, and most are tax deductible. In addition to records such as canceled checks and account statements, use petty cash slips or a petty cash log to record your small purchases. The software mentioned below is extremely helpful here.
- Employment records. It’s important to keep complete records of the wages, benefits and tips paid to your employees, including amounts and dates. Keep the names, addresses and Social Security numbers of your employees, and their dates of employment. Have employee copies of W-2 Forms been returned to you as undeliverable? Keep em. And keep copies of employees’ income tax withholding allowance certificates (Forms W-4, W-4P, W-4S, and W-4V). Many in home based businesses do not have employees but may utilize outsourcing which will require 1099 Misc. forms up to date.
- Business assets. Business assets such as computers and copy machines gradually wear out, and businesses can write off their costs over time. Be sure to keep records of the cost of the asset and the sales tax, as well as costs for delivery, setup, training and accessories. When assets are sold, record and keep a description of the item, the price and date of sale, and any expenses pertaining to the sale—such as brokerage fees or advertising costs. Too many also forget to keep track of their Business Assets and effectively use the depreciation schedules.
- Travel. Much of the cost of business travel is tax deductible, so keep records each time you make a payment—large or small—that involves a trip. Receipts for transportation, meals and lodging are a must. You should also keep a journal listing travel dates and destinations, the reasons for the travel .and a list of expenditure.
Automobile expenses (mileage or actual) need to be recorded. The Us Internal revenue Service accepts record for 90 continuous days or a complete week each month. Be sure to write down leaving your home office , reason for trip and return mileage
Grab this simple form and duplicate:
2011 Mileage Form
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I have been using this simple software for the past 5 years along with the advice gained from the FREE PDF listed below. This procedure has saved many hours and 10’s of thousands in Tax Dollars. Even if you have completed your 2011 Tax forms, you may want to read and see if it would be advantageous to re-file. Regardless I encourage everyone in the US who is involved in small business to get the Software and start today recording your activity.
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Also Download your Tax Saving FREE PDF here