Start by learning a new set of "3 Rs": record keeping, record keeping, and (you guessed it) record keeping. IRS studies also show that poor records - maybe not dishonesty - cause most small enterprises to don't comply with their taxation reporting obligations and to drop at audits, with ensuing fines and charges.
Even although you hire someone to keep your files, you need to know just how to supervise her or him - because in the event your bookkeeper goofs up, you're responsible. Consider utilizing a pc to help keep your records if you aren't already when you look at the digital age.
Keep all receipts and canceled inspections for company costs, and keep them arranged plus in a safe location. Split up the documents by group, such as:
- auto expenses
- enjoyment, and
- professional fees.
Place your papers into individual folders or envelopes. If you are ever audited (and smaller businesses are three times very likely to be audited than individuals), all IRS is most likely to zero in on business deductions for car expenses and travel and entertainment expenses. Furthermore, the burden will likely be you - maybe not the IRS - to substantiate your deductions.