Inc. magazine has published a list of tips on how to get your home business tax documentation in order right now, so next year’s tax filing will be trouble free. Sure, this isn’t the most exciting staycation idea ever, but on the other hand anything you can do at home you can do in your underwear with a six pack of beer. I should really become a motivational speaker.
The Inc. plan, devised by Miami-based CPA named Adam Spiegal, is called P.L.A.N.
P – prepare your records
L – list issues and questions
A – analyze financial statements for accuracy
N – note any changes in tax laws throughout the year
As you might have noticed, “N” is sort of a repeat of “L” if you’re doing things correctly, and “A”–keeping an eye on your financial statements–is something you should already be doing if you like money.
So aside from jotting down questions for later and double-checking your financial statements, what this really comes down to is keeping accurate records right now, this summer, so that you’re not digging through piles of receipts next tax season.
Spiegel says in particular you need to keep great records of travel and entertainment-related expenses, since those attract the IRS more than other types of expenses.
Another tax advisor tells Inc. that lots of small business owners screw up the whole 1099 issue. If you hire any subcontractors/vendors and pay more than $600, you have to issue a 1099, which means you should to make sure you get their tax ID info and addresses now.
If your eyes haven’t glazed over by now, check out the full Inc. article for more tips from tax experts, especially on how to reconcile your accounts and create balance sheets and income statements.