When you’re running an e-Commerce business, one of the more unpleasant tasks that come up each year is filing your taxes. To get the greatest tax return possible, you must report your expenses as well as your various deductions. Here are some of the expenses that you must make sure you keep a record of.
Office equipment of any kind must be recorded according to the threshold set by the internal revenue office. In general, it’s best to save records of all your office expenses. The office equipment can only be counted if it is used exclusively for office work. This means that your computers and other multimedia devices cannot be used for personal tasks.
The added glitch with business deductions is the fact that you must track the use to claim certain types of business deductions. For instance, you can take multiple deductions on your office computer if it qualifies under the tax code. The amount that you can deduct depends on how much it is used and the rate at which it has deteriorated over the year. Remember that it must be an actual computer or piece of equipment used in the business rather than excess inventory that you occasionally use.
Mileage and Time
If you decide that you’re going to claim your mileage as a business deduction, then make sure that you take precise note of your mileage, time, and expenses related to the trip. Even though these receipts will likely be significantly less than the threshold set by the internal revenue office, you should save all of them. Mileage and travel expenses have been an increasing area of scrutiny for business deductions. If the internal revenue office decides to audit you, then you will have to demonstrate that you actually did spend that money and go on that trip. However, in addition to this expense, you must also make sure that you document the reason for the trip. It’s best to include ticket stubs, explanations, and anything else that can show why your trip was a business expense.
There are times where you may find yourself with customers who renege on their obligations. These are known legally as bad debts. Instead of just absorbing these costs, you can count them as an expense. You must record all details relating to the debt itself, the attempts you have made to recover it and anything else that may relate to the debt. If this continues out over a span of years, make sure to note the dates as well.
Tracking expenses is a necessary financial responsibility for your e-Commerce store. You need to give priority to your office equipment, mileage and time, and bad debts. These three items make up the majority of your business deductions that you need to track in advance. Keep your information as accurate as possible and remember that when you can include dates, check numbers, and the like, you make your filing that much stronger, and it becomes more likely that you will later be able to include them in your deductions.