Computer Home Business - The Dirty Dozen - Mistakes to avoid (Mistake # 9)

This article is part of a series, collectively titled "The Dirty Dozen. Mistakes that could ruin your business" Making these mistakes can be very costly in terms of time and money, but all these possible errors can be easily avoided some knowledge beforehand and planning for the future. Although I believe the information contained in this series of articles can be very useful for professionals home, it is very important for you to know that I'm writing this series of articles solely from a "lessons learned" perspective. I am not a lawyer, tax, accounting or professional. You should consult an appropriate professional for detailed advice that is specifically relevant to you and your business.

In this article, I intend to discuss the potential problem area of ​​not keeping adequate records.

I can not overstate the importance of maintaining clear and accurate records. If you have never filed a tax return for a business before, will probably be quite surprised by the amount of information that will be necessary. If the IRS ever audits your tax returns business, may be required to explain and show proof of every single business expenses.

Do not throw anything away until you are positive that no longer matters. In general, many tax experts recommend keeping all the financial business records for at least seven years after the date of your tax return. So if you are submitting a statement that includes business income and expenses for tax year 2007, you must keep all expense receipts, tax returns, etc. until at least 2014.

Do not freak out. While maintaining detailed documentation of financial assets is of crucial importance, is also quite simple. Here is a simple and inexpensive, but very effective way of keeping track of your business documents. Go to a hardware store or supply office and get one or two small plastic trays that are a good size for holding regular letter-sized white envelopes. Start labeling envelopes with the categories of business expenses: office supplies, training, hardware and computer software, etc. Put all your receipts in the bar of the envelopes at the end of each day. Once a week, put all receipts in the appropriate envelopes. When you come across a receipt that does not already have an envelope, make one at that time. Doing the same things for all business income is received.

If you are comfortable with the scan, you can also scan and organize receipts, business electronically. I still have a sort of pencil and paper brain, so I just do what's envelope, and works well.

Remember that you may be able to claim business mileage for your car. This can really add up to a good to you - but it is also easy to lose track of it. Here's an easy way to stay on top though. Take a lined index card (to decide which format is best for your writing). Making the columns labeled "date, destination, purpose, start mileage miles, mileage, and the final journey." Keep the card index and a pencil in the car (you can connect to a small clipboard). Every time you go somewhere that could count as business mileage, simply fill up quickly in a row in the index card. When the card is full, take in, and deposit in an envelope labeled "mileage". Even if you do not calculate the miles "journey" Every single day, if you record the starting and ending mileage for each trip, you will have the information needed at tax preparation tax professional to help verify that the mileage is allowable.

Note: You can not mix business and personal mileage. Let's say you head out to make a few copies at Kinko's business, and then, since you're running errands anyway, you decide to get your grocery shopping done too. If you go to the supermarket adds miles beyond what your Kinko's trip would have taken alone, deduct mileage that "personal" business mileage from your complaint. Again, talking with a tax professional in the early months of the fiscal year can help a lot!

Mileage on your car is not the only type of travel expenses that you may be able to claim as business expenses. We say that flying somewhere to attend a professional conference or taking a class that is relevant to your business. All travel expenses (transportation, hotel rooms, meals, etc.) may be deductible expenses for you. You might also be able to claim the costs of conference registration or class fees, text books, etc. as business expenses legitimate.

The key here is to maintain a complete and detailed documentation, including receipts for all expenses. You can always discard the record that is not necessary. Find support information for an expense "deductible" can be time consuming, frustrating and may ultimately disqualify you from claiming legitimate expenses because it is not possible to document.

In addition to documenting your business finances if you have never occurred, this care record-keeping also helps ensure that you get to take every deduction you are entitled to business. Again, please consult a tax expert about all this.

Make sure your business expenses are eligible: consult a professional tax advisor to confirm that all business expenses are within IRS guidelines. (Write down all the expenses that you think may have - just check with an expert.)

Another possibility is to keep all business records electronically. Intuit Quicken and QuickBook offers a range of products for both PC and Mac users will take time to know if this is all new to you, but once you're familiar with them, checkbooks and electronic business-record holders you can save a lot of time - especially when it's time to do your taxes.

Again, please remember that what I do here is just my personal understanding of these topics. I suggest you get professional assistance .......