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Tips for Keeping Business Records ~ A Guest Post By Maria Rainier

The IRS doesn’t care that you’ve got kids to feed or that you’re new to being a work-at-home mom.  They will tax you where they can and you will hurt.  This isn’t a threat, only a truth.

So, what to do about it?  You’ll find that keeping proper business records for your home-based business is often inconvenient, usually confusing, and always a learning process.  These tips—and a few tricks you’ll doubtlessly come up with yourself as time goes by—will ease the learning curb and make tax time significantly less painful.

1.       Home office deduction.  Read up on the IRS’s rules about the home office deduction (http://www.irs.gov/newsroom/article/0,,id=108138,00.html) to see if you qualify.  Don’t be scared to do it if you do qualify because you’ll be able to deduct a portion of your rent or mortgage and utilities bills as business expenses.  Save all of your monthly payment bills if this is the case.  Remember to not allow the kids into this room since it is your home office.  A large amount of evidence—should the IRS come poking—that you’ve been mixing business with pleasure might void your deduction.

2.       Keep receipts.  If your printer runs out of paper while printing out documents for your business, keep the OfficeMax receipt.  If your lamp loses a bulb, keep the receipt.  Keep any and all receipts made for purchases for your home office and business, including office supplies and equipment (from sticky notes to your new Mac, as long as you use that computer primarily for business).  Keep the receipts for Internet provider fees, phone bills, membership fees, and any other costs to keep your business running.  Deduct these from your taxes as business expenses.

3.       Advertising and professionals.  If you advertise for your business or have hired a professional to help you (such as an accountant or printer), save the receipts.

4.       Employee records.  If you’re not working alone, keep an accurate record of your employees’ hours to make the W-9 forms easier to fill out during tax season as well as calculate salaries.  If you’ve hired more than 10 people for your business, you’ll need to get an idea of what records OSHA (Occupational Safety and Health Administration) requires you to keep, including accident reports.

5.       Accounting.  If you ever make any kind of transaction for your business, you’re better off with evidence of it than without.  Keep copies of them to back up your income and spending in case anyone comes inquiring.  It’s best to accumulate all of your receipts and evidence of transactions in one place, like one notebook or filing cabinet, so you don’t lose things along the way.

Maria Rainier is a freelance writer and blog junkie. She is currently a resident blogger at First in Education, where recently she’s been researching different bsw degree programs and blogging about student life. In her spare time, she enjoys square-foot gardening, swimming, and avoiding her laptop.

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