This past year was the first year that I was fortunate enough to work from my home. Working from my home has been a wonderful change for both personal and professional reasons. The only thing that caused a slight issue was the tax filing changes that I had to endure. The office in my home was now considered a tax deduction. I had to get some help learning how to deduct the things that are allowed on my federal taxes. If you are new to working from home and have a home office, this blog can help you learn what you need to know before tax time rolls around.
When it comes to bookkeeping needs for your small business, few things are as complicated as your tax accounting and record keeping. There are so many details associated with small business taxes and the records that the IRS requires. If you haven't yet retained a business bookkeeping service to help you with these matters, you need to understand how to keep the records that support the tax filings. Here are a few things that you should keep in mind.
Business Transaction Records
The business transactions associated with your bookkeeping include your revenue-generating activities, investments, expenses, and anything else that affects your financial status. Make sure that you keep all records of sales, payments, invoices, and receipts. Your bank statements, interest statements, and other documents should also be kept. The best thing to do is to store all of these documents along with the tax returns for the year that they apply to. You'll want to keep them for at least seven years, but the longer the better.
As an employer, your payroll records are a vital part of your tax filings. You will need to keep everything that supports your business payroll, including employee timecards, benefits statements, payroll payments, payroll tax withholding statements and quarterly filing records, and even any retirement fund contributions. All of these things affect your company's tax liability and should be stored with the tax return for that year. Remember that records like these also contribute to your worker's compensation calculations, so having them stored and accessible long-term is important.
Anything that you've claimed as a business deduction on your taxes must be clearly documented as well. You'll need the receipts from the purchase, documentation of where the item was placed, and information about how it is being used by your company. The more comprehensive these documents, the less risk there will be of issues in the event of an audit.
Your company's bookkeeping and tax records are very important. Any kind of issues with the IRS can lead you to serious financial problems that may ultimately result in closing your business. Protect your business and your own financial interests by following these tips and working with a bookkeeping professional to get and keep your company's records organized. Your bookkeeper can help you with the storage and organization of your records, and they can even refer you to resources for audit support in the event that your company needs it.Share
30 September 2019