No entity strikes fear into our hearts quite like the IRS. It is big, powerful, and can literally take everything you have, including your freedom. Unfortunately, making them happy involves a lot of complicated paperwork, especially for business owners. This is where you will be happy to have a good, reliable bookkeeper. Below, we will tell you all about the IRS and bookkeeping services, as well as how they can work for you.
1. What Bookkeeping Do I Need?
You should always keep good and accurate financial records to help you monitor the progress of your business. It is useful for preparing financial statements, identifying lucrative sources of income, eliminating those that aren’t, and much more. Bookkeeping also helps you satisfy the IRS by keeping track of your deductible expenses, property expenses, and all other relevant items to help prepare your tax returns.
2. What Records do Bookkeepers Need?
You and your bookkeeper should keep track of any expenses and payments to your business. This includes expenses such as rent, utilities, products, workers, vehicles, etc. Income includes any payments, fees collected, benefits, windfalls, etc. In most cases, you are not required to keep any particular set of records for these. However, you will want the most accurate accounting in the unfortunate event of an audit. Good records include invoices, credit card statements, bank statements, receipts, and many more. This goes for business owners, the self-employed, and the standard worker.
3. How a Bookkeeper Helps Business Keep Records
Business owners have far more records to worry about. For example, the average worker usually gets a W-2 to report their total income. The business owner must get this number themselves while being accurate to the dollar. A bookkeeper helps by keeping the following records:
- All purchases including supplies, materials, products, etc.
- Sales of all goods and services, including returns.
- Payroll, contractors, and pay for any other workers.
- Regular reoccurring expenses such as power, water, gas, etc.
- Federal, state, and local taxes.
- Any losses including those caused by extreme weather.
- Any other expenses that are business related. Your bookkeeper can tell you if they are valid. Remember it’s better to keep too many records than too little.
4. Burden of Proof
Unfortunately, the burden of proof always lies with the tax filer should anything be contested. You will be responsible for substantiating your entries, credits, deductions, and all statements made on your tax returns. You will also be asked to provide certain proof of expenses to properly deduct them. The IRS recommends keeping your tax records for four years, but we recommend keeping them for as long as possible. The same goes even for businesses you don’t own or spouses who have passed away. You may click here to get a seminar from the IRS on small business taxes.
The IRS and Bookkeeping Services in Houston
Don’t file false records with the IRS. Use our professional services for those of you who live in Houston and the surrounding areas. Our bookkeeping is accurate, professional, and fairly priced. Feel free to contact us to learn more on how we can help with your bookkeeping needs.
