If you have recently started your own business and you conduct it from your home, taking care of your finances will be a large party of your everyday activities. It is important to keep proper documentation of your income and expenditures throughout the year so you are prepared with the proper numbers to hand over to your tax preparation service when income taxes are due. Here are a few tips you can use to help better organize your monetary documentation ensuring you are not scrambling at the last second to give your tax service the correct figures need to file.
Purchase Accounting Software
Most people will do most of their accounting in a program on their computer. This is a great way to input every cent you spend for the company as well as help you keep track of your income and profit. You will be able to conduct a variety of reports to show you where your business stands monetarily at any given time, making it easier to tweak your way of conducting business if you notice you are not making as much as you would like. Accounting software will allow you to download your information to a hard drive so it can be given to your tax consultant, making it easy for them to input the information into your tax forms. Make sure to back up your files to a hard drive regularly.
Set Up A Filing System
While having monetary information on the computer is easy to utilize, it is imperative to have hard copies of pertinent information. At any time your computer can break or files can become damaged or lost if you fall victim to a security breach. Make copies of invoices, receipts, and bank statements to keep in a locked filing cabinet. Make sure your system is easy for you to understand so you do not lose information within the cabinet. Filing by date is a great way to look back at what had happened in your business at any given time. You can also separate the file folders by customer or project.
Keep Track Of Home Office Equipment
If you have a home business, you will want to deduct for a home office or working space. Because this can raise a red flag for auditing, it is important to prove to authorities that you do indeed have space designated just for employment. Take several photos of your work space as well as any furniture or equipment used to do your job. If you have a vehicle to use for your work, take pictures of this as well. This information should be kept in your filing cabinet if needed down the road.
Keep receipts of any furniture or equipment you purchase. Since these things depreciate over time, you will need to figure out their current value when filing taxes. Keeping the receipts will help determine their age so you can make a fair estimate when deducting for them in your taxes.
To learn more, contact a business tax preparation company like Wiggins, Smit, Burby, Reineke, & Company P.A.Share