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Useful Tips For Good Tax Record Keeping

Considered by many to be one of the most important aspects of keeping company finances or personal finances in order is good tax record keeping. In fact, the IRS requires that individuals and businesses keep certain types of tax records for a given period of time.

When tax records are disorganized or in disarray they can end up costing an individual or business in terms of deductions and even trigger a potential audit. In short, good tax record keeping is important to helping virtually everyone save money, time and trouble over the long and short term.

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One of the first steps in keeping good records is to choose carefully when it comes to accounting software systems.

There are several high quality accounting software packages available today. Consult with your Atlanta tax professional or software expert to determine which system will indeed be best for your unique and specific needs.

Even when using accounting software it is important to outsource all final tax records and returns to your Atlanta tax attorney or tax accountant.

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Business owners should always remember that they carry the burden of proof when it comes to business taxes.

Business owners must be able to prove that they are indeed entitled to various deductions and expenses. One of the best ways to establish proof is in providing good record keeping.

As a note is important to never take deductions or claim income if you do not have the documentation that supports your claims. Always keep organized records when it comes to cash register tapes, receipts, canceled checks and other types of documentation.

This will ensure that your accounting ledger and journal entries are accurate, detailed and timely.

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In addition, always keep all original paper documents with ledgers where transactions are recorded. This is a good strategy for having a backup in case there is a disaster such as a fire or severe water damage.

It is equally important to scan documents into a computer file so that they can be stored for later retrieval. Businesses or individuals who used EFT or electronic funds transfer must also show proof of payment.

That is why it is important to keep accurate records when it comes to EFT type transactions.

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Finally, business owners and individuals should pay close attention to petty cash funds. Transactions that are made from a petty cash fund account must be considered cash disbursements with accompanying source documents.

As an added note, tax code requires that records be maintained for a period of no less than four years. As a general rule most experts recommend maintaining all records for a minimum of seven years.

Those who own property should consider keeping records on a property until the period of limitations has indeed expired. These are just a few tips on how to keep good tax records going forward.

Contact a professional today to learn more. Contact The Gartzman Law Firm, P.C. an Atlanta, Georgia tax lawyer today to learn more.

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