Keeping your receipts in order
What is a Business Expense?
The IRS defines a Business Expenses as a cost that is both ordinary and necessary to the operation of the business. Accurate expense tracking can give your business a great advantage at tax time.
Deductible expenses can be
Keeping the proper documentation can make it easier to figure out what is a deductible expense.
Always keep your receipts. There are many different receipts collected by businesses every year and they can all start to blend together and after twelve months it can be hard to remember what all of them where for. You should create an expense report for each receipt and attach the receipt to that report so you wont have to guess when you or your Tax Professional get ready to file your return. Today there are online bookkeeping software and printers that allow you to scan a receipt and type an expense report that can be save on your hard drive or printed to place your files making it even easier to keep you receipts organized.
Categorize your receipts
It is important to keep your receipts filed in separate groups, do not place your monthly utility bills in the same file as your personal expenses, keep all your receipts filed under their own category. When it’s time to organize your documents to file your tax return it can be time consuming to sort thru your receipts this can lead to mistakes or unwanted scrutiny from the IRS.
It is helpful to keep your receipts grouped in categorizes
- Monthly utility bills
- Monthly supply costs
- Capital Expenses
- Personal Expenses
- Monthly Bank Statements
This can make a clear definition between your expenses and make it easier for you or your Tax Professional to file your return.
Consult a Tax Professional
Even if you have the time and experience to prepare your own tax return it would be a good idea to consult with a tax professional at some time during the year. Tax codes are always changing and some codes will only apply in certain cases, it can be a full time job keeping up to date with them. Many tax preparers will answer your question in a free office visit, but you may find you need more advice and it may be worth the small fee to ensure you are ready to p repair your return accurately.
IRS Business deductions