Fairy Godmother, Gina Gwozdz Talks about Receipts

gwozdz.jpgGina Gwozdz is a Tax Accountant in Texas.

Her magical tips:

The most tedious and dreaded part of running a small business for most owners is maintaining their accounting records. The IRS requires every business owner to maintain accurate records so that they can determine if you have properly reported all your income and expenses. If your small business was ever audited you would have to prove every deduction your business claimed. The only way to do this is by showing them your receipts for every business expense.

I have found that the easiest way for new businesses to do this is to have a folder that corresponds to each tax item on their return. For example, if you are a sole proprietor your file folders would probably include:

  • Income Your Business Received
  • Returns and Refunds
  • Inventory purchased for resale
  • Advertising
  • Car and Truck Expenses
  • Commissions and Fees
  • Contract Labor
  • Employee Benefits
  • Insurance
  • Interest
  • Legal and Professional Services
  • Office Expense
  • Pension and Profit Sharing Plans
  • Rent
  • Repairs and Maintenance
  • Supplies
  • Taxes & Licenses
  • Travel
  • Meals & Entertainment
  • Utilities
  • Wages
  • Other Expenses
  • Business Use of Your Home
  • Business assets used more than one year
  • Cash – Bank Accounts
  • Credit Cards
  • Loans

Many businesses use software programs to help them add up all their receipts. This is perfectly acceptable, but you still need to maintain the original receipts and having them in separate file folders will make them much easier to find in the future.

Usually the IRS has 3 years to audit your company, but under certain situations, they can audit you as far as 6 years back. For this reason it is probably wise to keep all receipts for at least 6 years. Receipts that are related to assets that are used in your business for more than one year, such as buildings, equipment, furniture, etc. should be kept until 3-6 years after you sell or otherwise dispose of the item.

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  1. Allways use a good tax attorney. He can save you more than he costs and maybe even worse (fines, Jail) !

  2. How do I find a POS software program that fits my needs? My main revinue is via services offered. I am a “People Business” and want to know all about my customer, esp special dates to send out cards or reminders.

    I also have a very small retail area with the regular type of info for inventory and accounting records.

    I’m only 3 months old and want to get a program now before I have too much data entry.

    I’m thinking I might fit something similar to a dental office or beauty salon.

    I’m an indoor playroom for moms w/ babies and infants with a tiny retail/consigment area.

    Thanks so much!
    Dana Callahan




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