Many business owners only think about their tax and expense records toward the end of the year and during tax season. Keeping up with certain records all year long makes life much easier at tax time.
Invoicing, expenses and inventory are important, but don’t forget about the property owned by the business. You must do a return for property tax as a business annually. You can download a checklist at https://www.quonassociates.com/ which reminds you about information needed for home office expense allocations. Very careful records need to be kept to successfully claim home office expenses.
Owners and employees of businesses need to keep detailed diaries of automobile mileage. Typically in the case of employees, they will be reimbursed directly on a per-mile basis. The tax authorities typically have a maximum per-mile allowance. To ensure these expenses can be deducted, date, time, distance, destinations, and business purpose need to be recorded. For many employees, this will require several entries per day. There are apps available for smart phones that automatically track mileage so that personal and business mileage can be recorded more easily. In the United States, the IRS guidelines determine how these expenses are deducted.
Other Expense Receipts
Keeping up with receipts for items purchased from stores is extremely important to ensure that the deductions will stand up. Most of these items should be allocated to office supplies or office expense. In most cases, relatively inexpensive items, including most personal computers, can simply be set as expenses, but check with your accountant as to whether they will need to be added to your property tax return.
Some type of spreadsheet, accounting system or expense tracking software should be used to keep all of these expenses dated, sorted and allocated correctly.
Recording all of these items as you go during the year will make it much easier to prepare taxes. Your accountant will thank you, and you’ll maximize your expense deductions in the process.