The last thing most people think about when starting a business is doing taxes. But proper planning will make doing your taxes much easier later on.
Here are three simple tips for keeping proper records:
ONE: Always remember that if you buy anything for your business, keep the receipt. This will make record keeping much simpler, and if you are ever audited , you can prove your expenses and save yourself money.
TWO: Write down all your expenses and income as they occur. As your business grows, you'll have lots of activities to keep you busy. The last thing you'll want to do every April is to organize your records for the year. That's why it's a good idea to write down all your financial activities as they happen. You'll find preparing your taxes will take less time if you are organized.
THREE: Learn to sace money on your taxes. As you learn your way through the taxes, you'll find that there are many deductions, expenses that can reduce your income and so reduce your taxes. These deductions are not always obvious. When using your home office you may be able to deduct at least partially repairs you make around the house, utilities home value at the time you start your business and more. The more you know about taxes the better organized you'll get with keeping records the more time and money you'll save at the end of every year.
What happens if you don't keep proper records?
People with small busineses are more likely to get their tax returns audited by the tax inspectors. If you don't keep receipts, you will likely lose the deduction and therefore owe money. And while you should not fear an audit, you should be prepared- the more organized your records the easier it will be to prove your case.
If you don't have one, get a file box and some folders at your local office supply store these supplies are deductible, so keep your receipts! and create a filing system for your business. Put all your receipts in the proper folders, and put them in a safe place ,so you can easily find them.
Another way to save yourself time is to record all of your business transactions - expenses and income - on a spreadsheet on your computer. Keep a column for income, advertising, supplies, etc. You don't need to be a computer expert. But keeping accurate, organized records will help you save time when you fill out your taxes at the end of the year. And it will help you plan by giving you your financial progress whenever you need it. Which may come in handy when you need to borrow money to expand.
Here are three simple tips for keeping proper records:
ONE: Always remember that if you buy anything for your business, keep the receipt. This will make record keeping much simpler, and if you are ever audited , you can prove your expenses and save yourself money.
TWO: Write down all your expenses and income as they occur. As your business grows, you'll have lots of activities to keep you busy. The last thing you'll want to do every April is to organize your records for the year. That's why it's a good idea to write down all your financial activities as they happen. You'll find preparing your taxes will take less time if you are organized.
THREE: Learn to sace money on your taxes. As you learn your way through the taxes, you'll find that there are many deductions, expenses that can reduce your income and so reduce your taxes. These deductions are not always obvious. When using your home office you may be able to deduct at least partially repairs you make around the house, utilities home value at the time you start your business and more. The more you know about taxes the better organized you'll get with keeping records the more time and money you'll save at the end of every year.
What happens if you don't keep proper records?
People with small busineses are more likely to get their tax returns audited by the tax inspectors. If you don't keep receipts, you will likely lose the deduction and therefore owe money. And while you should not fear an audit, you should be prepared- the more organized your records the easier it will be to prove your case.
If you don't have one, get a file box and some folders at your local office supply store these supplies are deductible, so keep your receipts! and create a filing system for your business. Put all your receipts in the proper folders, and put them in a safe place ,so you can easily find them.
Another way to save yourself time is to record all of your business transactions - expenses and income - on a spreadsheet on your computer. Keep a column for income, advertising, supplies, etc. You don't need to be a computer expert. But keeping accurate, organized records will help you save time when you fill out your taxes at the end of the year. And it will help you plan by giving you your financial progress whenever you need it. Which may come in handy when you need to borrow money to expand.
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