Don’t risk a small business tax audit – Now’s the time to get your small business in order
A small business tax audit can be a scary, time consuming hurdle for any small business owner. As tax time approaches, many small business owners, entrepreneurs and independents will be faced with the annual task of culling the year’s business expenses from invoices and receipts. If you’re one of the few who diligently file, scan and organize each and every expense throughout the year and transfer them to your accountant on a quarterly basis, then you’ll probably never know the joy of showing up at your accountant’s office with a bag or box full of paper and hoping for the best.
What risks can you face as an entrepreneur or small business owner by not digitizing, storing and managing all expenses?
- Lost expenses – this costs you money….directly. Relying solely on paper receipts is a risky business, as paper receipts are easily damaged or lost. Once lost or rendered illegible, these receipts cannot be submitted as business expenses on your tax return.
- IRS Audit – should your small business be selected for an audit, not having a paper or digital image of your expenses could result in back taxes owed including penalties.
- Lack of visibility into the performance of your business – if you’re not digitizing expenses, you may have difficulty keeping track of what your small business is spending versus what it’s bringing in. This is a small business killer and the most common reason many businesses fail.
How can your mobile phone prevent lost expenses and an audit?
Your mobile phone can do a great many things. With apps like Neat’s Mobile Receipt Capture, your cell phone can become your own personal bookkeeper. Receipt scanning apps like the one offered by Neat are powerful tools that are ridiculously simple to use. ere are a few ways the tool can be used to ensure your small business is fully audit-proofed:
- Snap a picture of receipts as you get them…at the gas station, supply house, office supply and more.
- Create folders that puts receipts into categories – like “job names” if you’re a contractor or trades-person purchasing materials for a job.
- Connect neat to an accounting app like QuickBooks and your expenses will flow from the point of purchase through the accounting process
- Keep the stored images of your receipts in Neat for a minimum of 7 years in the event of an IRS Audit
Neat transforms your mobile phone into a useful small business tool. In addition to the mobile app, you can utilize Neat’s cloud software from any device (PC, laptop or tablet). Neat provides a wealth of value with functions like expense and spend reporting and our patented ID2 technology that automatically extracts information from your paper receipts and invoices and transforms them into searchable records.
Get started with Neat today! Check out our pricing or sign up for a free 30-day trial.