Entrepreneur Tax Guides & Tips

One of the most popular myths among business owners is that their accountant will take care of their taxes. FALSE! All the numbers included in your tax return are your responsibility. Your business transactions create the numbers not your accountant. Essentially, your tax return and the amount of your deductions are only as accurate as the records you have maintained and provide to your CPA.

Tax Savvy for Small Business: Year-round Tax Strategies to Save You Money by Frederick W. Daily, Diana Fitzpatrick Tax Savvy for Small Business provides valuable strategies that will free up your time and money for what counts -- running your business, and running it effectively. It explains how to: deduct current and capitalized expenses write off up to $105,000 of long-term assets each year compare the advantages of LLCs, corporations, sole proprietorships and more take advantage of fringe benefits keep records that will head off trouble with the IRS get tax breaks from business losses deal with payroll taxes negotiate payment plans for late taxes handle an audit get IRS penalties and interest reduced maximize retirement funds use retirement funds as a tax break

Your accountant depends on you to provide the details on all your income and expense transactions so they can apply the most advantageous tax strategies. Documentation is the key to sustaining all tax positions. Without documentation it is easy for the IRS to call foul and deny your tax position. Or even worse penalize you with back taxes and interest.

The IRS unlike a court considers you guilty until you prove you are innocent. The burden of support is on you.

So what can you do get start putting more money back in your pockets and audit proof your tax returns?

• Build a Documentation System
  The system should include three components: permanent files, monthly files and daily files. Permanent files would include your prior years’ tax returns, stock buy and sell confirmations, contracts and real estate records. Monthly files would include invoices, cash receipts, canceled checks and payroll support. Daily files are basically your appointment book. We will provide tips in later articles on how to beef up your appointment book as it is an overlooked area where many deductions are missed.
• Never Use Your Personal Checking Account or Credit Card for Business Purposes
  This is a tough one for young businesses but I always recommend to my clients that they should separate the two as soon as possible.
• Have All your Records Digitally Imaged
  Your accountant should be taking advantage of imaging technology and putting all the records you provide them into a digital database. This will help to guarantee they are maintained for the required 3 years. In addition, I also recommend to all my clients they prepare a digital video for all their personal and business assets. Video everything in your home and business. This will help if documentation gets lost and it will also give you solid evidence to support an insurance claim. Unfortunately, you never know when a fire or burglary might occur.

When you’re prepared the IRS or insurance examiners have a lot less ammunition to fight you with.

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