A funny thing happened to me yesterday. A friend of mine notified me that I should check out one of my other blogs (which was on another site) as there was some sort of advisory posted on it. So, being the person I am off I went to investigate. Boy was she ever right. When I arrived at my blog I was greeted with a big black and white banner across the top that said “Parental Advisory Explicit or Illicit Content” can’t remember the exact wording but you get the idea.
Well I started laughing so hard I had tears in my eyes and thinking to myself “what is so explicit about bookkeeping & taxes”? I’m still baffled about that one but it gave me a good laugh and I hope it does for you as well!
Just so you know I deleted that blog and will now just be blogging here on WordPress! :) Hopefully they will not take offense here to my bookkeeping & tax tips. ;).
Beginning on Jan. 1, 2009, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:
55 cents per mile for business miles driven
24 cents per mile driven for medical or moving purposes
14 cents per mile driven in service of charitable organizations
I hope this information is helpful!
As people are preparing to complete their tax returns they may be able to deduct mileage as an expense.
From 1/1/08-6/30/08 the business standard mileage rate is: 50.5 cents.
From7/1/08-12/31/08 the business standard mileage rate is: 58.5 cents.
For more information or for previous year rates go here http://www.irs.gov/taxpros/article/0,,id=156624,00.html
This question comes up a lot here at the office. I am asked at least 3 times a week as there seems to be lots of confusion out there in the "real world" amongst business people.
The answer is it depends…
If you just complete a Self Assessment Return each year as a consequence of having a company car or other employment benefits, then you should keep your paperwork relating to your claims and expenses for 2 years. The reason for this is that HMRC have a full year after the filing deadline to open an enquiry into your affairs. So for the tax year just ended on 5th April 2008, you need to keep this paperwork until at least April 2010.
However, if you are a business owner, the records need to be kept for at least 6 years but preferably longer. If your accounts year end is 30th June for example, your 2008 Self Assessment will include your accounts information for the year ended 30th June 2007. So paperwork for that year runs from the 1st July 2006 onwards. You should realistically therefore keep those records until at least April 2015.
I personally recommend people keep as many years as possible because you just never know when they may be useful. I know we are told from all quarters that Identity Fraud is rife and can only be prevented by shredding everything the minute you receive it, but a lack of important records during a full tax Investigation can make defence against HMRC proposed additions very difficult indeed.
If you are thinking of disposing of business records, I would strongly recommend you take advantage of micro-fiche techniques as much as possible, or keeping endless backups of your paperless office (as I do) so that all possible information is stored in a way you can get to it. Then you can shred with confidence knowing you can still answer probing questions easily. Most modern micro-fiche services and paperless office systems allow searching of documents so tracking things down is simplicity itself.
If you are concerned about what happens if your business records are lost…
Lost records have been a problem since time began. Sometimes the loss is genuine and records ruined in fire or floods etc., but sometimes the "loss" is a smokescreen because the business person thinks they can outsmart HMRC by claiming the records are lost.
HMRC has lots of information sources they can access in these situations, including digging into your bank accounts when the statements are lost (have you any idea how much the banks now charge for each statement HMRC ask for? between £5 and £25 each depending how far back they are needed), looking at your lifestyle to get a handle on how much money you spend, interest information, dividend information etc.
Without records, investigations become much easier for HMRC because you cannot provide any rebuttals to assumptions they make about your financial affairs and those investigations always end up with a much higher settlement than if all the records are available.
So… try hard not to lose them – they are worth their weight in gold – literally. Micro-fiche them, scan them, copy them, protect them as best you can so that if the originals do go AWOL for any reason – then it is no big deal at all.
I hope this clears up a little confusion about business records for you.
Ray Stewart is the MD of Coalville Business Services Limited. He writes articles and reports about bookkeeping and business growth strategies, the two areas of business he is most passionate about. His bookkeeping business website is at http://expertbookkeeping.info and is a free resource for people looking for simple answers to bookkeeping questions and a chance to speak to him for free if you can’t find the answer you are looking for. You can also visit his private blog at http://raystewart.biz and subscribe to the RSS feed there to keep right up to date.
With year end coming up on us fast are you prepared? Are your books in order? There is nothing more frustrating then coming into tax season and not being prepared.
Here are a few things that need to be in order:
- Make sure that your accounting program is up to date.
- Bank Accounts are reconciled and tie to the ending balances.
- Get all of your business receipts into order.
- Print or E-mail to your Accountant appropriate financial statements.
Hope this information is helpful!