As the countdown to Christmas continues and people everywhere frantically search for those last-minute gifts, business owners search for those last-minute tax saving tips. Let’s consider a few simple items to make sure your bookkeeping records include as many tax breaks as possible for 2013.
In this series of articles, we are addressing some key items concerning year-end bookkeeping for most businesses, as well as offering specific information in certain arenas of business tax deductions. In the first article of this series, we address typical business expenses and offer a few notes.
Ensuring that your books have record of legitimate business expenses incurred or paid for 2013 is one of the most basic, and yet most crucial, steps you can take. Have you entered every receipt? Have you accounted for every legitimate business deduction? Consider the following:
- All ordinary and necessary business expenses should be properly accounted for in your records. These include such items as office supplies, repairs and maintenance of computers and equipment, advertising and marketing costs, utilities, rent, meals and entertainment, and business travel costs.
- Don’t overlook industry-specific business deductions either, such as Cost of Goods Sold for retail or manufacturing businesses, subcontractors paid by construction industries, and various trucking or freight costs common in over-the-road trucking industries.
- Contemporaneous bookkeeping secures the best substantiation in the event of a tax audit. Delays in recordkeeping can be costly. Receipts fade and become illegible. Receipts can be lost and unaccounted for. True business deductions can easily be overlooked. Regular bookkeeping prevents helps avoid such losses of deductions.
- Due to the fading of receipts with age, scanning of receipts and preserving them electronically is one way to circumvent this deterioration process. For tax audits, as long as the receipt can be accessed, viewed, and/or printed legibly as would be in its original condition, the scanned receipt serves as proof of the expense. For certain deductions, canceled checks also serve as proof.
- Due to the special care and regulations regarding certain business expenses, seeking a professional bookkeeper to assist with your bookkeeping and tax needs is recommended. All business owners can benefit by using professionals trained in areas of bookkeeping and taxation to help them secure every legal break available.
Save your tax dollars by making sure your books reflect accurate records of your income and all applicable business expenses. In the remaining articles of this series, we will concentrate on certain business deductions that are often overlooked or misunderstood.
Christmas isn’t the only countdown business owners should be concerned about. Taking a few crucial steps in regard to the accounting of your business records can make all the difference as tax season rolls in.