When you work as an entrepreneur, you likely have an accountant take care of your tax preparation. The assistance of an expert increases the likelihood that you'll be able to use all the write offs available to you and pay as little in taxes as possible. Your accountant may be managing your paperwork at tax time, but he or she can't do it alone. Part of the way that you can lend a hand is to provide your accountant with a tidy set of business-related receipts that you've accumulated throughout the year. These can then be used in the calculation of your taxes. Saving potentially hundreds of receipts doesn't have to be daunting. Here are some tips for managing them.
Put Business Expenses On Separate Receipts
You'll make your life and your accountant's life easier by keeping your business-related expenses separate from your personal expenses. For example, if you're doing your groceries and realize that you need a pack of printer paper, you may be inclined to buy everything on one receipt. However, you or your accountant will then have to subtract the cost of the printer paper, which is a business expense, from the total cost of that groceries, as they're not a business expense. When you go through the store's checkout, simply have the cashier ring your paper through on its own receipt.
Get Rid Of Receipts You Don't Need
It can be easy to put a receipt in your pocket, wallet, or purse and leave it there for a while and then wonder if you were meaning to keep it for a specific reason. While it's critical to keep all of your business-related receipts, you don't necessarily need other receipts. It's often better to get rid of other receipts right away — or, if you don't want to throw them out, keep them in a large envelope separate from your business receipts. This will save you poring over a random receipt at tax time and trying to surmise whether you kept it as a write off.
Group Similar Receipts Together
There are many effective ways to organize your business receipts, but doing so with a series of envelopes is a simple, valuable method. Determine the nature of your typical expenses and label an envelope for each of these categories. For example, you could have envelopes labeled "Utilities," "Travel," "Training," and "Office." Each time you have a new receipt, you can quickly evaluate its ideal category and place the receipt in the appropriate envelope. Then, at tax time, you can give these tidy envelopes to your accountant.
For more information and tips for preparing your taxes or helping out your accountant, talk with tax professionals, like those at Vlasac John M & Co.
Share24 February 2017
Accounting is the absolute most important element of running a business. If you mess up the bookkeeping even the slightest bit, the entire business could be in trouble. I know how costly a small bookkeeping error can be. About three years ago, I made a seemingly small mistake in the financial records for my business and the next year when I filed my taxes, things were very bad for me. What would have required a small tax payment had suddenly turned into a big tax bill and quite a headache. Since then, I have worked with an accountant and things have been better.