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Tips for Tax Record Keeping

Tips for Tax Record Keeping

  • Record keeping for tax purposes is extremely important. Having the proper records can benefit any business or individual when it is time to file taxes. This process can be stressful but there are helpful tips that can make it a little easier.
  • Keep every banking record that you come across. It is important to keep all of your banking records to show proof that your company has been using its money the way it was intended to be used. Records especially need to be kept for all loans received, all gifts that were obtained, and even all account transfers.
  • Make sure to always keep your personal bank accounts and business accounts separated. It would not be good for personal purchases to be seen on a business account. This can have bad consequences when being audited and give the auditor an impression that personal purchases and business purchases are not being kept separated.
  • If your company donates to charity, make sure to keep all records showing exactly how much was donated and to which charity. There is a charitable donation deduction that you may qualify for if the proper record-keeping is done right.
  • Try to pay for most bills using a check or a credit card. If bills cannot be traced to a certain account then an auditor may have the means to do a wider audit if they suspect cash is being used as well.
  • Make sure that all IRA fund records are obtained and kept in a safe place. This will assist in keeping track of every tax-deferred earning. This is something that will be very useful if an audit were to happen.
  • It is very important to keep all of this information and records in a safe place while it is still possible to be audited. This information should be ready to be used within the time frame in which an audit may occur. It is very imperative that these files are archived and saved in secure places.
  • Last but not least make sure that all of these records are kept in a place that no one else may have contact with. There is extremely personal information on all of these documents that could be destructive if in the wrong hands. It would be best to purchase a fire-proof file cabinet that locks. This way your documents are kept in a safe place where only you would have access to it.

It also helps to keep your records neat and organized. There is nothing worse than being audited and having to search around for your proper documentation in an already stressful time. Records should be filed under tabs that would make the documents easy to find. If you encounter any problems the professionals at AttorneysTaxRelief.com are an expert resource to turn to for help preparing for an audit.

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