Wednesday, November 26, 2008

"Do I really have to keep *all* these receipts?"

This is a common question from people in business. Let's think practically here for a moment. Those receipts can be quite a bother. They seem to accumulate over night and take over your desk before you can sort through them! Right? Well the bigger trouble is, at year's end, they matter. You need to be able to prove your expenses if you're going to claim them on your tax return against the income you've received.

A sound piece of advice would be to find a way of contending with receipts as the year progresses, perhaps a filing system or system of envelopes by category would work. Remember, always date such envelopes with atleast the year on the outside, this will help keep things simple in the future. Maybe it could be just as simple as stapling them to the check stubs or taping it to your calender. A quick note on the receipt saying who/what it was for or to would also be a good idea, this may clear up any questions regarding it's relativity later.

Also, talk to your tax preparation professional to find out which receipts they need to complete your tax forms. As a preparer, they do not need to see every one, you wouldn't want to pay them that much to sit and go through all those receipts. But they will need some for back up in their records. Contributions is a more recent important receipt that will be needed by your tax professional due to changes in the recent tax laws.

Always keep in mind, an IRS agent will automatically delete any expense you can't prove so it is extremely important to keep your receipts and keep them in an orderly fashion for easy retrieval for this purpose. If you are ever audited by the IRS, your receipts are imperative. So be diligent and organized when it comes to receipts and work closely with your tax professional to save expense and time in the long run.

Monday, November 3, 2008

Time to order forms

It's Nov. and that means the year end is right around the corner. Don't forget to order all the year end forms and corresponding envelopes to finish your calendar year tax filing requirements. Various businesses need more of some and less of others to meet all the requirements set forth depending on their activities. Some basic forms you may need are:

Federal 941: Employer's Quarterly Tax return
Federal 940: Annual Federal Unemployment
W-3: Transmittal summary sheet that accompanies the Copy A pink forms of the ...
W-2: All copies. You have to send out recipient copies and the pink Copy A's as well as keeping a Payer Copy. Don't forget the envelopes to accompany forms W-2 to employees for their personal tax filing information. Reminder: The deadline for postmarking W-2 forms to employees and the IRS is January 31st.
1099's: There are various 1099's according to what type of monies have been paid. The most common will be the'1099 Misc' used for box 7, Nonemployee Compensation paid to self employed sub contractors and the like. Oh, also box 1, rents paid. Make sure you have the correct spelling and full information for each recipient including their Social Security number or Federal ID number. Don't forget to order window envelopes for the specific style of forms you purchase.
1096: Transmittal summary form to accompany the Copy A to be sent in to the government.

Don't forget to order early, sometimes you can save a bundle on your supplies. And be conservative when ordering, these forms are year specific and cannot be used in later years (or prior years either). January is normally a very hectic month trying to do inventory and keeping up with other various year end reporting as well as staying on track with current regular duties, shopping for year end forms at the last minute and hoping they arrive on time to complete and send in can be more of a hassle than necessary. Order early and your supplies will be waiting for you!

As always, seek professional help if you have any questions or need assistance completing your forms and filing them timely. You may even decide to have an accounting and payroll professional prepare all of your forms for you by providing the final figures to them. This is also a good time to seek a local trustworthy tax and accounting professional in your area in order to secure the help you need. Chances are, they will have their hands full if you wait til the last minute to seek help and you may end up paying late penalties and interest if you do that.