Digital Document Management for Protection from Tax Audits
Keeping your tax receipts and financial documents organized is important to protect yourself from audits. Moreover, keeping tax receipts in order is the best way to evaluate annual expenditure. Organizing your business receipts for tax time is possible with a proper financial document management system. Here are some tips to help manage your tax related papers.
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Keep all receipts: Keeping your receipts is critical. This includes small receipts such as cash register slips, or credit card slips. Even charitable donations are not exempt by the IRS and as a donor you would have to produce bank records or written documents. Avoid getting into an argument with IRS by keeping tax receipts for even the smallest expenses. Write the item purchased and the date on the receipt.
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Go digital: Rather than storing these slips and facing the risk of losing or misplacing them, convert them to electronic format. IRS allows electronic tax records, but you need to follow IRS guidelines on electronic storage system to maintain them. Scan it and create an efficient document management system by entering all the details – date, item, store or company, notes, category and sub-total for each month or at the end of the year. This will ensure easy access and retrieval of the records. Enter receipts and notes as soon as you can after each expense so that nothing is missed.
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