By Sophia – People and business should realize the need to keep their #tax return documents organized in a neat and tidy fashion. This is because when they will be preparing to file a fresh tax return, then the tax documents which are kept well organized will help in to minimize tax-#time anxiety. Moreover, tax debtors, who opt for tax debt settlement services offered by various law firms, keeping all the tax and other related documents prepared, is all the more crucial for them. Attorneys who fight for such debtors will be able to save huge amount of precious times in preparing those documents and win the case easily.
So, every person regardless of their profession should inculcate the habit of keeping good tax records.
#tips to keep good tax records
Every small business entrepreneurs should follow the below mentioned tips to keep their tax record well-organized:
#money receipts – As per the #internal #revenue Service (IRS) recommendations, every small business owner should keep all records of the business and his employees. These business records should have the #information of all receivables. For instance, a small business entrepreneur should maintain the records of every gross receipt. This may be a #cash register receipt, ledger receipt, invoices, credit card bills, bank deposit slips and so on, which may be maximum 4 years old.
Company resources – Small businesses should be careful enough to collect all the transaction receipts of their equipment purchases and capital investments. Moreover, even the papers or documents of any sort of merger or acquisitions must be recorded with due diligence. In addition to that, all the real estate documents should be kept in a separate place, so that it does mixed up with other financial documents.
Expenditures – Records of all the bounced checks, bank cards (including both credit and debit cards), company #account statements, minor cash bills and invoices should be well-maintained.
Buy-outs – Apart from the above records, small business entrepreneurs should keep records financial documents like business credit card statements, invoices and invalid checks in order to prepare for easier tax return.
These were some of the tips of tax record for small business entrepreneurs. On the other hand, individuals need to follow a different regime altogether, to keep a good tax record. Some of them have been mentioned further below:
Place of record – Every person will have to earmark a proper place that can be used as an area to stack up files with all the financial documents. This is a very healthy practice since one may get stressed out as the deadline of tax return approaches. As per the Murphy ’s Law, a single lost record will be the most difficult to find.
Records of properties – The IRS suggests that every person should keep all the records of real estate transactions made by them throughout the year. The record should include #data for the past 3 years. This may be records of selling, transferring, and purchasing of a real estate asset. The property can be used for a range of purpose, for example as a principal home of residence, investment portfolio diversification or as a second home.
Records of daily #expenses – The IRS further suggests that all the daily expenses should be recorded. The records must include grocery bills, purchase invoices, bounced checks, car mileage statements, credit card bills, etc. Records that are 3 years old must also be kept.
Records of investments – All records of investments into different asset classes like stocks,bonds, forex, and real estate are extremely important for every individual that needs to be kept in an easily accessible manner. In case, a person fails to do so, then he may have to pay for the Capital Gains tax or attract tax liens for filing improper tax return.
Moreover, one should not forget to keep the records of transactions of the Individual Retirement Arrangement. This will help him to proof any dispute that may arise in case of a sudden audit conducted by the IRS.
Good luck on record keeping !