Passageway Financial - Accounting, Tax, & Consulting’s Post

Everyone in business must keep records, especially those that will come in handy when it’s time to think about taxes on the business. Good records will help you do the following: Monitor the progress of your business. You need good records to monitor the progress of your business. Records can show whether your business is improving, which items are selling, or what changes you need to make. Good records can increase the likelihood of business success. Prepare your financial statements. You need good records to prepare accurate financial statements. These include income (profit and loss) statements and balance sheets. These statements can help you deal with your bank or creditors and help you manage your business. Remember, an income statement shows the income and expenses of the business for a given period of time. A balance sheet shows the assets, liabilities, and your equity in the business on a given date. Identify the source of the receipts. You will receive money or property from many sources. Your records can identify the source of your receipts. You need this information to separate business from non-business receipts and taxable from nontaxable income. Keep track of deductible expenses. You may forget expenses when you prepare your tax return unless you record them when they occur. Prepare your tax returns. You need good records to prepare your tax returns. These records must support the income, expenses, and credits you report. Generally, these are the same records you use to monitor your business and prepare your financial statements. Support items reported on tax returns. You must keep your business records available at all times for inspection by the Internal Revenue Service (IRS). If the IRS examines any of your tax returns, you may be asked to explain the items reported. A complete set of records will speed up the examination. Source: Internal Revenue Service Following a good record-keeping practice is beneficial for any business. Properly organized records provide a view of the present financial status of the company. It also provides information on all transactions made during the past year, like bills, receipts, statements, invoices, proof of payment, etc., which is useful in filing the returns and claiming tax deductions. Maintaining records ensures proper documentation of all information pertaining to business that employees or owners can readily access and helps in increasing productivity. https://lnkd.in/dAsKRvFQ

Everyone in business must keep records, especially those that will come in handy when it’s time to think about taxes on the business. Good records will help you do the following: Monitor the progress of your business. You need good records to monitor the progress of your business. Records can show whether your business is improving, which items are selling, or what changes you need to make. Good records can increase the likelihood of business success. Prepare your financial statements. You need good records to prepare accurate financial statements. These include income (profit and loss) statements and balance sheets. These statements can help you deal with your bank or creditors and help you manage your business. Remember, an income statement shows the income and expenses of the business for a given period of time. A balance sheet shows the assets, liabilities, and your equity in the business on a given date. Identify the source of the receipts. You will receive money or property from many sources. Your records can identify the source of your receipts. You need this information to separate business from non-business receipts and taxable from nontaxable income. Keep track of deductible expenses. You may forget expenses when you prepare your tax return unless you record them when they occur. Prepare your tax returns. You need good records to prepare your tax returns. These records must support the income, expenses, and credits you report. Generally, these are the same records you use to monitor your business and prepare your financial statements. Support items reported on tax returns. You must keep your business records available at all times for inspection by the Internal Revenue Service (IRS). If the IRS examines any of your tax returns, you may be asked to explain the items reported. A complete set of records will speed up the examination. Source: Internal Revenue Service Following a good record-keeping practice is beneficial for any business. Properly organized records provide a view of the present financial status of the company. It also provides information on all transactions made during the past year, like bills, receipts, statements, invoices, proof of payment, etc., which is useful in filing the returns and claiming tax deductions. Maintaining records ensures proper documentation of all information pertaining to business that employees or owners can readily access and helps in increasing productivity. Check us out: https://lnkd.in/dAsKRvFQ

Intro to Business Deductions Common business expenses, yes, but what else is and is not deductible? Are there rules for deducting business expenses? Click through to generally learn how to deduct the costs of running a trade or business from your taxes and what isn't deductible, like capital expenditures.

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Tax Myth #2: All of My Business Expenses Are Tax-Deductible Many new business owners assume that all of their business expenses are tax-deductible. This, however, isn’t the case. While certain business expenses may be eligible for deduction, they must meet certain criteria before they are considered tax-deductible. For example, business expenses must be ordinary and necessary and the cost of the expense must be reasonable. Additionally, the expense must be directly related to the business in order for it to be considered tax deductible. To maximize the amount of deductions you can take, it’s important to keep accurate records of all of your business expenses. This means keeping track of all receipts, invoices, and any other documentation related to your expenses. This will not only help you document the expenses for tax purposes but can also help you stay organized and keep track of how your business is doing financially.

Some useful basic information from the IRS regarding starting a business

Knowing which expenses you can deduct from your business income can be tricky. As a new year begins, it's a good time to review which expenses are generally deductible and which ones aren't.

Did you know? Most business deductions aren't listed in the Internal Revenue Code. Section 162 allows deductions for "ordinary and necessary" expenses incurred in your trade or business. Find out which of your business's expenses qualify.

Are you looking to purchase assets for your business? Eligible businesses can spend up to $20k per asset and immediately claim the tax deduction and GST. Talk to us about the best strategy for purchasing business assets.

Scrupulous records and legitimate business expenses are the key to less painful IRS audits. If you operate a business, you know records of income and expenses need to be kept. Specifically, you should carefully record expenses to claim all the tax deductions to which you’re entitled. And you want to make sure you can defend the amounts reported on your tax returns in case you’re ever audited by the IRS. Certain expenses, such as auto, travel, meal and home office expenses, require extra attention because they’re subject to special recordkeeping requirements or limits on deductibility. In addition to keeping good records, make sure to use your business bank account for business purposes only. A business can’t deduct personal expenses. Contact us with questions.