Article Link: http://exchangepress.com/article/getting-a-head-start-on-tax-savings/5025653/
Keeping a child care operation’s tax bill low should not be a problem, given the effects of the pandemic on the bottom-lines of so many. However, to keep a business’s tax bill low year-after-year requires planning. One of the best tools for reducing taxes year-after-year involves the records maintained by the operation. Good records can help every early childhood professional generate an accurate tax bill and ward off zealous IRS auditors. But, that’s not all.
Those Dreaded Basic Records
Good records are invaluable for monitoring a troubled operation’s recovery, when preparing financial statements required by lenders and investors, rewarding when selling the center and particularly helpful for securing financing.
It should be no surprise that more deductions are disallowed by the IRS for lack of substantiation than for being nondeductible. But, while the IRS does not require receipts for expenditures of less than $75, most tax rules do require some expenses be documented—a chore in anyone’s book.
The IRS does not require an early childhood program or business to keep records in a particular manner. So long as the records produce an accurate accounting of income and expenses, the method best suited to the business can be used. Of course, because every early ...