You may hate the keeping records part of the tax system, but it’s critical to your tax health. It’s also important to your business health. Good records help you monitor and improve your business.
Do not depend on the IRS for mercy when it comes to your tax records. You will never find the word “mercy” in the same sentence with the IRS. It does not exist in the code or the regulations.
Since there is no mercy, you have no choice but to get your records right. Getting your tax records right is not difficult when you know what to do. This article gives you the record-keeping basics you need and helps you spend less time keeping records.
The first rule to keeping good records: Do not commingle activities in your checking accounts. Most taxpayers should maintain separate checking accounts for
each separately reported Schedule C business,
each corporation, and
rental property (if there are substantially different types of rentals, then additional separate accounts may be necessary here).
Example. You operate your business as a proprietor and cover your spouse with a Section 105 medical reimbursement plan. If you have ... Log in to view full article.