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| From:  Bev1781 (Original Message) | Sent: 4/29/2008 10:33 PM |
Want to AUDIT PROOF Your Tax Return?... Keep Good Records
by Rhonda Johnson
Over the years we have found the biggest reason folks leave money on the table is due to lack of good record keeping. That's right; you are overpaying your taxes by billions of dollars simply because you don't know what to keep. You don't know how to keep it, and consequently you are leaving the IRS a big tip! You need to treat your business like a business, so it will pay you like a business! If a qualified preparer was preparing your tax returns here's what you need to do as a minimum: (you can always do more, but just be consistent.)
1. Separate your business and personal income and expenses.
a. Get a second personal bank account to use for the business. Don't ask the bank for a business account to avoid unnecessary additional charges.
b. Use a separate credit card for business, even if it's in your name.
c. Carry both your personal and business checks and credit cards with you all the time.
d. When you make a purchases. . .decide right then whether it's business or personal and pay with the appropriate check or credit card.
e. Avoid cash transactions if possible. Keep the receipts if you must spend cash.
2. Cash Payments: Receipts / Invoices / Statements
a. File them by month.
Sort them into one of just six
Enter the total
3. Checks
a. Reconcile the bank statement.
b. Your deposits should equal your business income.
Don't count transfers from personal
Don't count credit card
c. File statements by month.
d. Divide the checks into one of six categories.*
e. Enter the total
4. Credit Card Statements
a. Code each item into one of six categories.*
b. Total each category.
c. Enter the total.
*Categories:
1. Advertising/Marketing/Promotion
2. Office Supplies
3. Home Related Business Expenses
4. Office Related Business Expenses
5. Travel/Entertainment
6. Vehicle
Rhonda, herself a direct marketer, has developed a collection of record keeping products designed to minimize the time needed to organize and record the financial details of your business. Go to her website www.makingtaxagame for more details about her C.Y.A. Tax Record Keeping System.
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