When that unhappy stranger steps into your office, this is what you're most likely to hear . . .
8. "Show me your Records."
Many business owners have recently begun using credit cards and electronic debit methods for paying expenses. Although ordinary and necessary business expenses are fully deductible regardless of the method of payment, these types of payments frequently fail to leave a paper trail that is adequate evidence for deductions.
The former commercially accepted norm of using your canceled check as a receipt has been circumvented by the new methods. Banks, credit unions, and other financial institutions that do not give back the checks with your monthly statements have further eroded this form of evidence. Sure, it saves the bankers money, but it may ultimately hurt you. They say that you can get copies any time, but have you ever tried to do that? Believe me, the wait can be lengthy. Or have you ever tried to read the pitiful copies they eventually send you?
Then there are the traditional record keeping problems. Items that are not easily purchased by check have to be tracked by other methods. Receipts can evidence travel and entertainment expenses. You can keep track of business use of autos and pickups with mileage logs. (I know that writing down your mileage and collecting little pieces of paper from restaurants are a hassle, but too often I have seen poor record keeping cause poor audit results.)
When the IRS
calls your corporation for an audit, they will inevitably ask for a
copy of the minutes from your shareholders’ and directors’ meetings. Under
Don’t think that if you are organized as an LLC or something other than a corporation that you are exempt from annual meetings. The same rules apply to you, though the terminology is different (e.g., shareholders are called members and officers are called managers).
Besides the IRS
audit problems from failing to keep minutes of meetings, not being in
Free Public Seminar
The author, Adrian Van Zelfden, hosts a half-day, free workshop, in the Arboretum area of northwest Austin, monthly. The time is devoted to business building tips and techniques, designed to be especially beneficial for business owners, self-employed people, and owners of professional practices. While this workshop is fraught with content, it has high entertainment value and is far from boring.
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