When tax season rolls around, your first priority is likely securing as many deductions as possible. In order to do this, it’s critical that you maintain detailed records of your business expenses and ensure that the taxes that you file are in accordance with federal law and IRS guidelines. The key to getting the maximum deductions while adhering to applicable guidelines and laws is to maintain stringent details in your records and to keep receipts and other documentation on hand so that your deductions are accurate and comprehensive. Even a small mistake in calculation or documentation could cause problems if you find yourself the subject of an IRS audit. Here are some tips to help you maintain detailed records:
- Keep all receipts: No matter how small the purchase may be, hold onto any and all receipts for business-related expenses. Even the purchase of printer paper could be under scrutiny during an IRS audit, so never throw away receipts, even if they might seem insignificant.
- Maintain detailed notes: In addition to holding onto your receipts, you should also make any necessary notes to ensure that you can qualify that purchase as a business expense. Buying dinner for a potential investor at a restaurant downtown counts as a business expense, but you might forget about how that restaurant bill was related to your business unless you properly document the connection.
- Create permanent records after filing: After your taxes are filed, don’t get rid of those receipts just yet. The IRS can perform an audit of your business’ taxes up to six years back. Protect yourself from any issues with the IRS by maintaining your records and keeping your receipts even after you file.
- Document daily business activities: The simplest way to do this is to keep a calendar that includes your daily business activities. While it might seem unnecessary, it isn’t uncommon for the IRS to request a copy of your business calendar in order to substantiate the deductions you claim. Writing down that lunch with a client or the trip you took to meet with a vendor during the day makes it easier to keep track of when and where you are spending money that can be added to your deductions.
- Avoid cash transactions: Paying with cash might be convenient in the moment, but it can greatly complicate your tax filing. Transactions made with credit cards are usually much easier to track, and you can use your bank statements as a way to further track expenses and corroborate your receipts.
Work with a tax filing service in Des Moines, IA
No matter who you are, everyone wants to get the most deductions possible when they file their annual taxes. To make sure that you are getting the most out of your tax filing, make sure to keep a detailed record of your business expenses to account for deductions. You can also boost your deductions by investing in help from a professional tax filing service in Des Moines, IA. At Accounting & Tax Professionals, PLC, we understand how important it is to get you the most deductions possible. We can work with you to take the guesswork out of filing your business taxes.