Here Are The 3 Top Tips For Keeping Proper Income Tax Records:
2. Make sure you record and write down your expenses as well as income as they happen.
3. Learn how you can save money on your taxes.
The more you know and learn about taxes, and the more prepared and organized you will be in keeping proper records, and the more time and money you will save at the end of the year!
But while an audit should not be feared, you should however be prepared – the more organized you keep your records, obviously the easier it will be to prove your case.
If you don’t have one already, get a file box or cabinet, get some folders from your local office supply store (deductible of course, keep your receipts!) and create a bill and receipt filing system for your home based business. Make sure you place all the receipts in the proper folders, and store them in a safe place.
Another way to protect as well as save yourself time is to write down all of your business transactions, including expenses and income, preferably on a spreadsheet on your computer or purchase a specialized small business software program. On a spreadsheet, keep a column for: income, advertising, office expenses and supplies, etc. You do not have to be a computer expert to do this. But keeping accurate, organized records will help you in saving time when you fill out your taxes.
Keeping these records can also help you plan, by giving you an exact snapshot of your financial situation when you need it, and it will also come in handy when you need to borrow money or buy capital equipment. Hey, you may even have enough money to take that much needed and well-deserved vacation!