Date post: | 21-Oct-2014 |
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for your businessEssential things you need to know
Record keeping
all the necessary paperwork,like receipts, purchase dates, and mileage expenses
finding
May be one of the most dreaded parts of preparing your taxes.
all the necessary paperwork,like receipts, purchase dates, and mileage expenses
finding
You should retain any pertinent information that is documented on your tax return.
For example if you claim mileage, you should always maintain mileage records.
You should retain any pertinent information that is documented on your tax return.
If you depreciate items, you must retain all records during the depreciation period - which can range from 3 to 39 years.
Most other documents need to be kept for 3 years from the due date of the tax return.
If you depreciate items, you must retain all records during the depreciation period - which can range from 3 to 39 years.
Car ExpensesYou should always keep track of your mileage. Start today, if you are not already doing so, and write down your business mileage on a daily basis.
You can deduct any business meetings, deliveries, or any other work-related mileage.
Standard Mileage Rate
This is the easier of the two methods to figure car expenses.
Standard
Since you are allowed a standard rate that includes gas, depreciation, maintenance and repairs, lease payments, oil, insurance and vehicle registration fees, you need to maintain fewer records.
Mileage Rate This is the easier of the two methods to figure car expenses.
You will need to keep track of:•Daily mileage for business use •Total mileage for year •Parking and Toll Road Expenses •Date you put the car into service
For more on what defines business use go here.
This method is generally more beneficial if you have high maintenance on your vehicle or have less mileage.
Actual Expense Method
This method is generally more beneficial if you have high maintenance on your vehicle or have less mileage.
Actual Expense Method
If you use your car for business and personal reasons, you must also figure out the business percentage.
If you traveled 15,000 total miles during the year, and 5,000 miles were for business, your business usage is
For example,
33%
of your car insurance, lease payments, maintenance, etc. to come up with the amount you can deduct as a business expense.
You can then subtract
33%
You should keep detailed records of:
•Daily mileage for business use. •Total mileage for year. •Gas receipts. •Maintenance and repair costs and receipts.
•Lease or car payments. •Vehicle registration fee. •Vehicle insurance . •Date you put the car into service for business use.
You should keep detailed records of:
Almost all equipment used in business that is expected to last ONE YEAR OR MORE can be depreciated.
Many things such as furniture, computers, and even landscaping can be depreciated.
•Model of vehicle, or description of equipment/purchase. •Date item was placed into service for business use. •Cost Basis, which is purchase price, plus shipping and installation costs. •Any improvements or additions to original cost basis.
Depreciation continues for 3 to 39 years, depending on the item.
Records you need to maintain for depreciation are:
if you take the equipment out of service or sell it, depreciation on that item stops, and you should keep a record of the sale date or date it was taken out of service.
Remember,
“…you may choose any recordkeeping system suited to your business that clearly shows your income and expenses.”
The IRS plainly states that:
“…you may choose any recordkeeping system suited to your business that clearly shows your income and expenses.”
All sorts of recordkeeping systems - from paper notebooks to accounting software are acceptable
The IRS plainly states that:
Written Records A written record can consist of an account book, log, statement of expense, trip sheet, or similar record.
Many people swear by a written logbook, especially for mileage expenses.
Advantages: It is easy to keep in the car with you, always available, low cost, and does not depend on the availability of an Internet connection.
Written Records
Disadvantages: However, you must do calculations and sorting by hand, which may be time consuming in the long run. There is no backup in case your logbook gets damaged, lost, or destroyed.
Written Records
Computer programsPrograms like Excel can perform many functions to help you maintain accurate records of expenses, and you can easily add additional data or fields, if necessary.
You should always do a frequent backup of your files to ensure that important material will not get lost.
Are two well-known programs that let you integrate bank accounts into your expense category, and allow you to customize reports, and sort them according to date and category.
Quicken® and QuickBooks®
Mobile AppsThere are a variety of mobile apps for keeping track of business car expenses. MileTracker is a popular option for iPhone users and Mileage Tracker is a popular option for Android users.
The fanciest record keeping system in the world will not work unless you enter the data.
Remember
Remember
It is best to record the information about your purchases and expenditures soon after they are acquired.
The fanciest record keeping system in the world will not work unless you enter the data.
“…well-organized records make it easier to prepare a tax return and help provide answers if your return is selected for examination, or to prepare a response if you receive an IRS notice.”
In the words of the IRS
A minute of organization now, will save you time down the road.
Remember
And Finally...
the process of To learn how to
running your businesssimplify
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