3 Tips For Keeping Proper Tax Records For Your Home Business And Keeping The IRS Happy!

If you are starting a business, the last thing you want to do is worry about taxes. But whether you are an entrepreneur or a growing company, proper tax planning can make doing your taxes much easier – and keep the IRS happy! 

If you file your taxes responsibly, you’ll spend less time dealing with the IRS or an outside accountant. 

When you file your taxes on time, you will avoid late fees and penalties, too! Plus, you will increase the odds your taxes will be accepted the first time. 

The IRS and other tax agencies can be very tough to deal with, and it is important that you have the right records to help keep them happy and avoid an audit. If you have a home business you need to make sure that you keep the following records.

 Here are three tips for keeping proper records and keeping the IRS happy.

1. Keep the receipt for everything you purchase for your company!

It’s important to keep records for any purchases you make for your business. Having good records for your business will make tax season a breeze. You’ll also be able to see where your money is going and what your expenses are. It’s a good idea to keep records on your computer or with an app. If something gets lost, you can always go back to it. Keeping a paper copy of receipts is also a good idea. If you get audited, you can show the IRS your records and save more money.

2. As your expenses and sources of income occur, record each one of them at once.

You have spent a lot of time and hard work building your business. Now, as time goes by and your business grows, your records become more complex. However, if you write things down as they happen, you’ll have an easier time organizing them. When April 15th rolls around, you’ll be able to prepare your return in less time than you think.

3. Find out how you can save money on your taxes.

The IRS allows all adults to deduct (to reduce) their income for a number of reasons. This includes all cash donations you made to qualified non-profit organizations, your moving expenses (so long as your new place is at least 50 miles from your old one), and even the value of your time that you give to volunteer organizations. 

These are just a few deductions. There are even more that you can take advantage of. To take advantage of these deductions, you must remember to keep track of your expenses throughout the year. This is important to help you save money on your taxes.

You will save more time and money at the end of every year if you are more organized with your record-keeping and have a better understanding of taxes.

What happens if you do not maintain accurate records?

Keeping records is essential to staying organized and above all, compliant with tax laws. If you don’t keep your tax records, what’s the worst that could happen? If you don’t keep up your records so someone can complete your taxes for you, you are still responsible for getting your taxes done. 

If you have not kept your records properly, it might be difficult and expensive to obtain proof that you paid your taxes. Tax fraud charges and penalties aren’t the only things you need to worry about if you don’t keep your records. Losing your records means you’ll have a hard time filing taxes in the future. It is important to keep yourself organized, especially when doing your taxes.

Conclusion

Business owners who run their companies from their homes have a lot to keep track of. Between all the normal business responsibilities, it can be hard to keep proper tax records for your home-based business and even harder to make sure you are keeping the IRS happy.