A Comprehensive Guide to Tax Returns, Bookkeeping, Payroll & More for Businesses of All Types

Taxpayers who claim deductions on their annual tax returns are required to provide proof of the amount they claim. In addition, taxpayers who deduct entertainment, travel, and transportation must prove that certain elements of their expenses are related to employment.

Records must be kept for a minimum of four years. If a deduction is claimed for a property, special recordkeeping rules may apply. Redlands Tax Service Also, a business that is audited will need documentation to support the deduction. These records include receipts, invoices, and other proof of payment. This documentation should be stored in a secure place and can be organized by year.

When filing your return, make sure to use the same accounting method used for the records. The two most common methods are the cash and accrual methods. It’s also a good idea to keep copies of supporting documents such as sales slips, canceled checks, and invoices. As long as these records are maintained and are properly substantiated, they should provide a solid basis for the deduction.

Lastly, remember that the statute of limitations for your income tax return is three years after the due date. You can’t file an extension, so be sure to submit your return by the deadline. And, as always, avoid paying for a preparer who will not sign your return. Some preparers try to charge you for a refund or get you to sign a blank tax return, so you may not be getting the best return.