Wayne Brasch wrote:
- quote -

Ah Wayne, let us not forget George m Cohan. I used that
successfully a couple of times now. Even IRS used it to
help a taxpayer once upon a time I saw. BeLIEVE it; or not.

ChEAr$,
Harlan Lunsford, EA n LA

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Everything you pay must be by check or credit card so
there's your total record on expenses. Everything you get
must go into your bank account, so there's your total record
of income. Quicken or Money will keep track of them.
There is no reason why anyone in business (except payments
in cash) should not have perfectly exact records.

ed

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<el_roachmeister[at]yahoo.com> wrote:

- quote -

To claim any deductions, you will need to have a system for
keeping track of all expenses, and you will need to have
some evidence of not only WHO was paid, but also something
that shows WHAT the particular expense was for.

Sure, some people don't keep records and just put numbers
they feel are "about right" on their tax forms. And, to a
certain extent, if you DO keep records, but are missing a
receipt or two, as long as you can document it in some other
way, you might be able to reconstruct the correct figures.
But I have seen too many audits where the taxpayer had no
good records, and that's when they get burned badly! Sadly
for you, the auditor WILL care.

I hate to say it, since I have a non-tax-related online
store, too. But you may need to consider actually printing
out copies of receipts for your expenses. Auditors like
that. Also, you should keep a log of your expenses, with
date paid, to whom paid, and what the expense was for (which
will save you if a receipt gets lost or wasn't available in
the first place).

The other non-tax reason for records: You can use them to go
back and see just how well the business has done. You, or
an accountant with these records, can use them to take a
good look at your business and see just where you might be
able to save money or get more money coming in. Just a
thought.

Good luck!
Bryan
------------------------ Bryan Kellar, EA
Oregon Tax Help, Inc. -- Portland, Oregon
www.oregontaxhelp.com
www.canadatax.org

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el_roachmeister[at]yahoo.com wrote:

- quote -

I subscribe to a weekly newsletter on court decisions on
taxation. I can tell you that one of the more prevalent
repeat decisions is denial of business expense deductions
because the taxpayer failed to substantiate the deductions.
You need to isolate and keep your bills, invoices, receipts
and proof of payment.

You can keep those documents electronically but I strongly
advise you to backup your hard drive.

--
Alan
http://taxtopics.net

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el_roachmeister[at]yahoo.com wrote:

- quote -

They do not all need to be in the one place, but they need to be where
you can find and retrieve them easily. I suggest different folders for
different expenses.

- quote -

You will probably have the expense disallowed.

- quote -

Yes, the auditor cares very much. Without the receipts, you
cannot prove that you are in fact paying your taxes
honestly. That's what the receipts are for.

--
To reply to me directly, remove the CLUTTER from my email address.

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<el_roachmeister[at]yahoo.com> wrote:

- quote -

If your return gets audited and you don't have an accounting
system of some kind nor do you have any receipts, that
auditor will have no mercy on you.

Wayne Brasch

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<el_roachmeister[at]yahoo.com> wrote:

- quote -

I'm going to assume here that you don't just send payments
off into the ether without any basis, let's say an invoice
or purchase agreement or something like that. That coupled
with your record of paying it is enough.

- quote -

How do you propose the auditor make this determination,
divination? Yes, an auditor will cut you some slack if
you've proved overall that you're honest.

- quote -

This isn't horseshoes. If you can't figure out how to keep
accurate business records, spend some time with an
accountant.

--
Phil Marti
Clarksburg, MD

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<el_roachmeister[at]yahoo.com> wrote:

- quote -

Please remember that one of the earliest federal audits was
a religious compliance audit better known as the Spanish
Inquisition. Cervantes was imprisoned by the auditors of
the Inquistion amd later wrote "To be forewarned is to be
fore armed.

I have never worked for the IRS, but if I was an IRS
manager, I would evaluate auditor performance as additional
tas revenues (including penalties and interest) versus
salary + expenses + overhead.

Thus, I would expect an auditor to look at your records as
an opportunity for a promotion.

Dick

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I have just started my own internet company. Most of my
expenses are online payments for which I may or may not get
a receipt. Or I get the receipt by email which often gets
lost in bulk folders.

My question is how meticulous do I need to be in keeping all
these receipts in one place? If I get audited and can't show
proof what will happen? As long as I am paying my taxes
honestly to the best of my knowledge will the auditor care?
I suppose things should even out since I may miss some
deductions while miss paying some taxes on some income.

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