Digital Document Management for Protection from Tax Audits

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Keeping your tax receipts and financial documents organized is important to protect yourself from audits. Moreover, keeping tax receipts in order is the best way to evaluate annual expenditure. Organizing your business receipts for tax time is possible with a proper financial document management system. Here are some tips to help manage your tax related papers.

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Digital Document Management for Protection from Tax Audits

  1. 1. Digital Document Management for Protection from Tax Audits Keeping your tax receipts and financial documents organized is important to protect yourself from audits. Moreover, keeping tax receipts in order is the best way to evaluate annual expenditure. Organizing your business receipts for tax time is possible with a proper financial document management system. Here are some tips to help manage your tax related papers. • Keep all receipts: Keeping your receipts is critical. This includes small receipts such as cash register slips, or credit card slips. Even charitable donations are not exempt by the IRS and as a donor you would have to produce bank records or written documents. Avoid getting into an argument with IRS by keeping tax receipts for even the smallest expenses. Write the item purchased and the date on the receipt. • Go digital: Rather than storing these slips and facing the risk of losing or misplacing them, convert them to electronic format. IRS allows electronic tax records, but you need to follow IRS guidelines on electronic storage system to maintain them. Scan it and create an efficient document management system by entering all the details – date, item, store or company, notes, category and sub-total for each month or at the end of the year. This will ensure easy access and retrieval of the records. Enter receipts and notes as soon as you can after each expense so that nothing is missed. www.managedoutsource.com  1­800­670­2809
  2. 2. Remember that IRS may rely on printed copies in audits. So when you do your document scanning, ensure that the documents and other related documents are clear and legible when scanned and printed. • Don’t depend on credit-card statements and canceled checks: Even though credit-card statements and canceled checks are important, they are inadequate without receipts. These records can serve for book-keeping purposes, but receipts are necessary when it comes to the IRS audit. • Track transactions in a daily business journal: Keep a record of the receipts in a daily business journal with an Outlook calendar or a Google Calendar. This report is useful for auditing as well as for legal purposes. • Use Credit Card/Debit Card for Transactions: Using cash for expenses will obstruct your efforts at good book-keeping records and audit documentation. Stick to using debit and credit cards for transactions to better track the expenses and reconcile them with the receipts. For a small business owner, time can be an important factor when it comes to managing tax records and financial documents. The solution could lie in outsourcing the task to a professional document scanning company. This will allow you to • Save your filing time • Get a digital archive of your documents • Get high resolution digital copies • Cut operational costs www.managedoutsource.com  1­800­670­2809
  3. 3. • Eliminate paper filing • Enjoy competitive pricing Reliable firms can also provide efficient document management systems for easy tracking of information and ensure the safety of your files with appropriate security measures. www.managedoutsource.com  1­800­670­2809

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