As a small-business owner, it's hard to know what records to keep and how to keep them so you can easily find what you need at tax time. "Why Business Owners Need to Keep Thorough Records" posted in the Fox News Small Business Center gives tips on how proper record-keeping could possibly lower your taxes.
Use accounting software like QuickBooks or Quicken to categorize your expenses and income. Keep track of capital contributions. "Any time you transfer money from a personal account or deposit cash from your pocket into a business bank account, you have increased your equity position in the business," the author writes.
Bank interest and owner loans shouldn't be overlooked when setting up your financial records. Don't mix up credit-card cash advances or consumer loans in with your income and expenses--these should be kept separate to avoid confusion. "Not only might the business owner, who obviously needed a cash infusion to begin with, hurt himself further financially by paying taxes on nontaxable income, but he is losing a valuable interest deduction by not properly tracking the repayment of the loan or cash advance," says the author.
Finally, don't neglect to properly record periodic income as "other income."
If you follow these simple steps, you can have less to worry about next time tax day rolls around--and you might find yourself owing less in taxes, too.
Until next time,
Sarah
Use accounting software like QuickBooks or Quicken to categorize your expenses and income. Keep track of capital contributions. "Any time you transfer money from a personal account or deposit cash from your pocket into a business bank account, you have increased your equity position in the business," the author writes.
Bank interest and owner loans shouldn't be overlooked when setting up your financial records. Don't mix up credit-card cash advances or consumer loans in with your income and expenses--these should be kept separate to avoid confusion. "Not only might the business owner, who obviously needed a cash infusion to begin with, hurt himself further financially by paying taxes on nontaxable income, but he is losing a valuable interest deduction by not properly tracking the repayment of the loan or cash advance," says the author.
Finally, don't neglect to properly record periodic income as "other income."
If you follow these simple steps, you can have less to worry about next time tax day rolls around--and you might find yourself owing less in taxes, too.
Until next time,
Sarah
