10 tips for keeping track of business write offs

Here are some tips to help you keep track of business write-offs for income tax purposes.

Tip one:
To help keep track of miles you will need to get a notebook and a pen to keep in the car at all times. If you get in the car to drive for business purposes you will need to write this down in your notebook. Be sure to record the date, the mileage when you left and the mileage when you returned, as well as the total miles driven. Also be sure to include what the purpose of the trip was. At the end of each month you can then input this information into your computer on a spreadsheet or similar software, but do not get rid of the papers from the original notebooks. When the notebook is full or if it is the end ofthe tax year you should file the notebook with your tax papers.

Tip two:
One idea to help keep track of your gas and car repairs is to use a business credit card to pay for the expenses. This way all of the information is in one spot and can be referenced easily, you should also save the receipts and file them with the credit card statement every month with the rest of your tax papers.

Tip three:
If you want to use your computer or any other electronics you have as a business expense you will need to keep a log of all activity. The IRS requires stricter reporting when it comes to using computers, video cameras, etc for business expenses because so many of them are also used for pleasure. To do this you should keep a notebook of some sort right next to your computer to record the day and time spent using the computer for business purposes, you should do this everyday. Then make sure that you file the records with your tax papers at the end of the year so you can prove to the IRS that you did use your computer for business purposes.

Tip four:
If you buy computer software that is used strictly for business purposes you can deduct 100% of the expense. Be sure to keep the receipt for the software with your tax records.

Tip five:
If you plan on deducting a home office expense and the computer expense you should record in your tax records the exact location of the home office, how many square feet it is, the square footage of your home and where the computer is located in the home office. This will make it easier if the IRS ever wants proof that you are using a home office for business purposes.

Tip six:
Make a list of all possible business expenses. Do not rush when doing this because you might only see the obvious expenses. Some expenses that you might consider is paper for your printer, your coffee that you drink during working hours, computer software that is used for your business (if you also use it for personal use you should not deduct all of the expense) and the list goes on. By keeping track of your potential deductions you can maximize your business write-offs and can keep better records of the expenses.

Tip seven:
Keep receipts for anything that you have purchased. Even if you use a company credit card and you get an itemized statement it is still safer to keep the receipt as well as the credit card statement. By having the receipts you can prove when you bought the item and how much you paid for it.

Tip eight:
Just because an item is not new does not mean that you can not deduct its cost for business purposes if you have decided to use it for your business. For example an old computer desk you had in storage, an old lamp to put on your computer desk. Just keep in mind that you can not deduct what you paid for it when it was new, but you must use fair market value when determining the amount you can deduct. To get an idea of fair market value do some research on the item and keep track of the research that you have done the research should be able to tell the IRS that the desk is selling for this much at garage sales or thrift stores.

Tip nine:
Keep all of your utility bills. If you have a home office you can not deduct your entire utility bill because majority of that bill will be for personal use, but you can use a portion of the bill as a business expense depending on how many hours you work at home.

Tip ten:
In your tax records you should keep a written statement that sets the hours that you will spend working from home. You should specify what days you are going to be working and what hours you plan on working each day. Keeping that record will help if you get audited by the IRS to help prove what hours you actually spend working.

Just remember that proof is everything when it comes to business write-offs, if you can not prove the item or deduction is valid then you shouldn't take it. For further information on tax write-offs consult your tax professional.