Tax planning and record-keeping: What you need to know?

Last year, we came across something from the Internal Revenue Service (IRS). Where they were educating taxpayers about the importance of keeping your records. For the sake of tax planning. We couldn’t agree more with this information as we noticed, over the years, that many small businesses are paying more than what they should be paying because they do not keep all financial records in place.

Records-keeping plays a vital role when the reporting time comes, and here are a few ways you can use to make sure records are safely kept;

  • A software-based system that keeps all information, including receipts, together, electronically.
  • If using paper storage, invest in labeled files that should be clearly sorted in order of date of transaction.
  • Add tax records to your files as you receive them throughout the year.
  • Also, keep records relating to property disposed of or for sale.

In addition to the above, taxpayers should make sure to notify the IRS of any changes to their address or legal name as it may result in overlooked deductions. Generally, the IRS encourages for documents to be kept for three years from the date that taxpayers filed a return.

Even though this is an important part. We encourage taxpayers to be wary of the electronic filing system that they choose. In case your details end up in the wrong hands and they fall victim to tax scams. For more information about this, or any other questions you may have regarding tax planning and how keeping your records intact can help you, get in touch with one of us. We will gladly assist with your tax planning and record-keeping.

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