Tax Audit Proof Your Business
October 23rd, 2007What Tax Deduction Documentation Is Essential?
The IRS requires that any income, expenses and purchases that you make for your small business be kept in some form of documentation. This includes a large number of items in most businesses. All bank statements, all canceled checks and all receipts are essential to keep organized. All accounts both personal and business are subject to auditing. Invoices and sales slips are all needed to verify your claims. Business expenses that are paid with cash also must be kept on file. You can do this through a petty cash sheet or on a simple notebook.
Electronic records are just as important. Your credit cards and bank records recorded online are all subject to auditing and therefore you need to keep them organized. They should not be your only communication about expenses, though. For example, if there is a notation that you spend $100 at Wal-Mart, that could have been on the latest toys for your children or on software for your business. Record what it is.Â
Details are essential!
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