We all dread Tax time, but actually having a home based business and keeping track of proper deductible items can really make life easier, keep more $$ in your pocket and save you from being audited.
Keeping track of your expenses and income means entering details about your expenses and income in a notebook, ledger, or software program. It isn't complicated, but it is necesary.
It is important to keep accurate records. It really helps you monitor your progress. Keeping track of your income vs. expenses each month, you can see how well your home based business is doing. Is it growing, and by how much? Are you progressing towards a profit? If you're already making a profit, are your profits increasing month after month? Are your expenses under control?
Your books will help you at tax time. Your accountant or tax consultant will have your nicely organized and detailed records to work from. This is far better than a huge jumble of receipts, scribbled notes, and so forth. It will also save them time preparing your tax return (which in turn saves you money!).
Your books will help if your home based business is audited. Detailed records will help you accountant show a paper trail for all your expenses and income. It's all in one place, organized and you will be so glad you took a few minutes each day to keep caught up.
What Records Should You Keep?
You should keep all invoices, credit card receipts, deposit slips, vendor invoices, cash register receipts, cancelled cheques, and so forth that will document:
Put together file folders, envelopes, or some other organization system that lets you find your information quickly and easily. Store all of your receipts and files for one tax year together in a box for easy retrieval.
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Erik Boh and Lynn Pistacchio are the contributors to our