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Why
is documentation needed?
Without documentation you end up losing your bona fide
deductions.
Documentation
is required by law.
IRS
states in its official publications that you must maintain
records that support accurate tax returns. The records
should be made at or near the time of the expense when
there is accurate recall. Such records must be permanent,
accurate, and complete.
They
must include sales slips, receipts, canceled checks,
you must write down your mileage, your expenses, and
certain other things, in "a timely fashion."
You must write this down "in a timely fashion"
in some kind of notebook or diary. In "a timely
fashion" means within 24 hours.
Documentation
also helps you to prove to IRS that you are pursuing
a profit and that your home-based business is a business
and NOT a hobby. If the IRS determines that your home-based
business is a hobby then you will lose your tax deductions
A
good diary also helps you provide the summaries that
your accountant needs, which reduces the time it takes
your accountant to do your returns, which reduces your
accounting fees.
The
IRS requires you to have a diary where you record the:
- Amount
of each business expense
- Time
it took place
- Location
of the business activity
- Business
purpose
- Business
relationship or the person involved
Our
Tax Reduction
Diary is a complete record keeping system to help
you do all of the above. It is also designed to save
you money all year long. Why? Because it reminds you
to record all those expenses that you often forget -
tips, tolls, telephone, parking, etc.
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