Why Excellent Bookkeeping is Required for Good Tax Practice

The goal of every business is to make money, it is therefore essential that you and your business have a constant eye on the flow of money going in and out of your company. Smart bookkeeping is the best way to find detailed analysis of your income and expenditure as well as avoiding any problems with misplaced documentation. As people like George Bardwil, who are knowledgeable in business will tell you, bookkeeping is the key to a healthy relationship with the I.R.S. When it comes to taxes, the best way to approach them is to ensure that every single invoice or receipt is available and that your details are up to scratch. To ensure an easy relationship with the I.R.S. here are the reasons why your finances should be in order.

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Audits Happen

Regardless of whether you think it will happen or not, audits do happen and whilst those selected for audits are often people who raise flags, there are many who operate above board and still find themselves the subject of an audit. If an audit team comes and you aren’t prepared then the experience will be a nightmare, you will have to search for documents that you can’t find and explain costings that you can’t prove because the documentation was lost. Avoid all of this by keeping your finances in order and all details saved in paper and data form.

Tax Return

The end of year tax return should cause nobody any problems or stress, the forms are simple to understand, there is plenty of help online for everyone who needs to fill in a tax return. If your finances are in good order then you will fly through the tax return without a problem, furthermore you’ll be able to get the maximum deductions that you are available to because you will be armed with prepared information. Those who don’t prepare well for their tax return will have hassle and stress, late nights searching for documents and could run the risk of paying a fine for late submission or incorrect information.

Penalty Charges

The power that the I.R.S. have as a government organization is to penalize you both financially and criminally, they will cause disruption to your business and in some cases, cause businesses to close. Late submission of information, failure to pay, late payment, invalid information and failure to declare foreign transactions are all subject to financial penalties and the price changes depending on the severity of your actions.There is no reason to take the risk of paying penalties or facing being under investigation just because you didn’t keep your books in order well enough to adhere to the tax rules.

Written by Harry

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