You Have To Prove Expenses On Property
Posted by admin on Jan 26, 2008
As a professional running your business out of a specific location, you either pay rent or are buying property. When it comes to having records of your property and the right to claim expenses on this property, it is up to you to do so at the time of an audit.
If you are leasing property, the best way to do this is to have a copy of your lease available for that year with your business records for taxes. You should have any property and equipment purchased for that property also located with your tax files. If you are purchasing property, have your documentation readily available to show this.
The fact is that having these documents can help you to show that you have the grounds for claiming expenses against that property. What’s more, you will need to use them to claim depreciation.
Keeping Track Of Key Auto Expenses
Posted by admin on Jan 12, 2008
No matter which way you plan to deduct your business expenses related to your vehicle, the fact is that you need records to help you. First, keep a log of when you use the vehicle for business especially if it is not used solely for business. Keep a notebook in your glove box to help here. You are not required by current tax code to have this log specifically, but you must show how and when the vehicle is being used.
Also, keep all of your receipts in one location for your vehicle. This includes gas receipts, repair receipts, insurance, and other investments that keep your vehicle running for your business. You can also keep this information recorded in a planner. This will allow you to keep all of your vehicle related costs in one location. If you use a credit card to pump gas into your vehicle, keep those statements and be sure that you know how much went towards business.
Using Your Planner To Record Expenses
Posted by admin on Jan 7, 2008
One of the best ways for you to keep an ongoing log of your business expenses is using your appointment book, your business diary or even your planner. Service businesses are the most likely to use this type of recording method. For example, if you have an appointment for a consultation, where is there a better place to right down a receipt number or invoice number for that appointment? This helps to justify the costs to an auditor should the time come.
Another way that this is useful is to use it to help record usage time. If you use something for both personal and business use, use a binder or notepad to record how you often you use it for business. For example, if you use your computer for both business and then to play your favorite computer game, record the time you spend for business on your notepad.
What Documentation Is Essential?
Posted by admin on Jan 3, 2008
The IRS requires that any income, expenses and purchases that you make for your small business be kept in some form of documentation. This includes a large number of items in most businesses. All bank statements, all canceled checks and all receipts are essential to keep organized. All accounts both personal and business are subject to auditing. Invoices and sales slips are all needed to verify your claims. Business expenses that are paid with cash also must be kept on file. You can do this through a petty cash sheet or on a simple notebook.
Electronic records are just as important. Your credit cards and bank records recorded online are all subject to auditing and therefore you need to keep them organized. They should not be your only communication about expenses, though. For example, if there is a notation that you spend $100 at Wal-Mart, that could have been on the latest toys for your children or on software for your business. Record what it is.
Details are essential!