Bookkeeping series: Are you keeping your receipts?

Don’t underestimate the power of a seemingly insignificant task like keeping receipts.

It may not appear to be necessary, but it is absolutely necessary for accurate financial bookkeeping!

Keeping good records will enable you to do the following:

Prepare your financial statements

Understanding the ins and outs of your business finances is no small feat, but it’s essential to ensure success. Keeping accurate records not only helps you stay organized – they give insight into how your operations are performing in terms of profit and losses.

Keep track of your deductible expenses

To ensure that no expense is forgotten come tax season, it’s critical to document it as it happens so you don’t miss out on any potential deductions!

Keep track of your purchase price of business property

When it comes to taxes, your basis is the amount of money you put into a property. This figure will be used to determine whether a gain or loss occurred when selling, exchanging or disposing of that asset, as well as calculating depreciation and other losses due to damage or casualties.

Prepare your tax returns

When doing your taxes, it’s critical to keep accurate records because they can help you properly report income, expenses, and credits. These documents are necessary not only during tax season but also throughout the year because they provide the data required to create financial statements!

Support items reported on your tax returns

To be ready for any potential IRS inspection, you must keep a complete set of business records. This will help ensure that the examination process goes as smoothly and quickly as possible, giving you peace of mind that your tax returns are accurate and up to date.

Saves you from a crisis if ever audited

Maintaining thorough and timely records of all business transactions is critical to ensuring a smooth IRS audit. This will provide you with the documentation you need if any items are questioned during an examination.

Keeping all transactions documented with a receipt can work wonders: you can reduce taxable income and increase your chances of getting your hard-earned money back come tax season.

In other words, those few moments spent pulling out the camera or printing receipts could save you hours in taxes later on!

Bookkeeping, Small Business

December 12, 2022

Prudence Rufus