Keeping of proper tax records is the least thing that is considered by many small business owners and managers, either when starting or running of their businesses. Adequate preparation will certainly make doing your tax obligations a lot simpler and also make the tax authorities to be pleased with you.
Below are 3 easy ideas for keeping accurate tax records for your small business.
- Keep proper record of the vouchers and the invoices and receipts
Whenever you acquire anything or sell any of your products or services, and assets. You need to keep the records of the transactions in terms of vouchers, invoices, receipts and any other source documents.
It is also vital to keep the records of your dealings with tax authorities in terms Value Added Tax (VAT) returns, revenue receipts and any other document in the proper file so designated Not only will this make document maintenance a whole lot less difficult, but also help if the tax authorities come around for tax audit or investigation.
If you do not have a system in place, obtain a documents box and also some folders at your neighborhood workplace supply shop as well as develop a document management system for your business. Place all your invoices with their vouchers in the appropriate folders, and also placed them in a cabinet for easy accessibility.
Which could be available in helpful when you have to put advertisements, obtain cash – or take a much required and also well-deserved holiday!
- Ensure your book of accounts record all your costs as well as revenue as they occur.
Ensuring that both your cash and credit sales, and also the cash receipts are well recorded in the appropriate books accounts to accurately capture your business revenue.
As you record your revenue in their respective book of account, so also you must create book of accounts for your expenses take care of them. These expenditures could be in form of advertising and marketing, materials, and so on. However, the payment for these expenditures must also be taken care of in cash book
- Make sure you have ways to conserve cash on your tax obligations.
The more you learn about tax obligations, and also the better you are in arranging maintaining documents, the more money and time you’ll conserve at the end of each year!
As you discover tax obligations, you’ll discover that there are numerous reductions (expenditures that lower your revenue, as well as for that reason your tax obligations) you could take that are not evident.
Exactly what occurs if you do not keep proper record of your business?
The tax audit exercise need not to be feared, if adequate preparation were made in terms of orderliness of your business documents, and the book of accounts, the simpler all these are, the easier it will be to confirm your business financial situation.
Most small business waste a lot of financial resources in the course of tax audit exercise because of improper keeping of their records and book of accounts. This is always in terms of being assessed on the Best of Judgement basis. This will result in raising objections and attending meetings upon meetings with the tax authorities, which will result in payment of higher fees to the tax professional handling such assignment.
Apart from the above, lack of proper records also result in payment of heavy penalty and payment of interest.
Maintaining precise, arranged documents will certainly help you to conserve time when you fill up out your tax obligations at the end of the month and year.
Keeping proper tax record could assist you in the achievement of your financial goal, by offering you a picture or your economic development whenever you require it.
As your company expands, you’ll have a lot more as well as much more tasks to maintain which could be hectic. You’ll discover preparing your tax obligations will certainly take a lot less time if your documents are properly arranged and your book of accounts properly recorded.
you can also download our Top 10 secrets to drastically reduce your business taxes free of charge.