Keep track of all income sources, such as W-2s and 1099s, as well as expenses, such as receipts for business expenses or charitable donations. Consider using a spreadsheet or accounting software to keep organized. Remember to keep all records for at least three years in case of an audit.
Here are some things to track:
Income and expenses
Receipts for business expenses
Invoices and payment records
Mileage for business-related travel
Inventory records
Employee payroll and benefits information
Depreciation of business assets
It is important to keep accurate and organized records throughout the year to make tax season easier. The recordkeeping system should suit your business and clearly shows your income and expenses. The recordkeeping system should include a summary of your business transactions and show your gross income, deductions, and credits.
For more information, please visit IRS.gov
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