I wrote in my last post, 3 ways to ensure your tax is filed properly in case of an audit. Besides the 3 tips I shared last week, here are a few more that is useful, especially for the small entreprenuer. For mid sized companies, you might not find the tips here all that useful because you are most likely already doing all of these tips below.
4. Scan your receipts.
Many shops today print out receipts on thermal paper. I guess that it is cheaper to maintain than traditional dot matrix type printers. If you have kept some receipts over some time, you’ll notice that they fade out. Better quality fax paper tend to retain the thermal images better but over 3 years, most will fade away.
So, besides photocopying these type of receipts, scanning them into you computer is another way to keep copies with generating additional paper, until you need it. By backing up your hard disk regularly, I think this is a better way. The downside to it, however, is that if you have a lot of receipts, then you might have to get a fast scanner, and someone to help you scan them in.
5. Get payment vouchers signed.
When you pay money out from your business, have the recipient of your money sign for the money they receive. This fulfils 2 purposes. One, they can’t say they have not receive payment from you. And two, you have proof that the money was really an expense item, not some fictitious payment that the tax authorities might question you.
6. Track your Income and Expense regularly.
For the self employed or solopreneur, tracking your income vs expenses monthly can be too much of a hassle, but do it at least quarterly. This enables you to plan you purchases and make use of any tax advantage. Take note of this especially if you expect a sum of money coming in say for a completed contract. Don’t wait until the financial year end, whereby you can’t do anymore adjustments.
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