|
Recordkeeping for Small Cash Purchases |
June -- I have a small home business selling used books on Amazon. Most of the book sales I buy from do not give receipts and accept cash only. Also, I pick up books at yard sales, etc where I also pay cash and have no receipt. If the amount is over $50 I usually pay by check and use my cancelled check as proof. I always keep a dated log showing what I purchased, where and the cost and mileage. Is that enough proof for the IRS for small cash purchases (under $50)? Thanks. Maureen from Pennsylvania Maureen, you are doing exactly what you need to do. A log of purchases will work. And if the people selling won't give a receipt or accept a check, and the expense is a large one, just write down the book titles and / or authors. You're showing a "businesslike" method and that's what the IRS likes. -- June For more about recordkeeping, check out these blogposts. |
|
Recordkeeping and a Refusing Spouse |
|
June: I am starting a small business and I have a question regarding recordkeeping. I have a personal checking account, which I rarely use. I also have a joint account with my husband. We use this for all of our bills. My husband will not use the method you describe in your book, SELF-EMPLOYED TAXSOLUTIONS, of creating an audit trail. He refuses to deposit his entire paycheck and write a check to himself for cash. And most of "our" joint money will be helping me get on my feet. How do I handle this? Thanks, Amy Hmmmmm, Amy. I think this is more a marital relations question rather than a tax question, but I'll try. You said your husband "refuses, " so here are some questions to ask your husband:
- If his boss told him to punch a time-card at work because it made for easier business recordkeeping, would he refuse?
- In case of an audit, will he spend his days or weeks dealing with the IRS folks explaining the inflow and outflow of your household money? Or would he expect you to take on this task?
- If the audit result were bad, does he not mind putting extra dollars in the government coffers rather than having done it the correct, easy, audit-trail way in the first place?
- Is he not open about other family financial transactions?
- Is he supportive of you and your business?
- Does he take your new indie venture seriously? Or does he look at it as something to occupy your time?
Well, whatever he answers, you need to be creative in working with a stubborn husband.
What about this: [I'll make up some #s because I have none from you to work with.] Let's say he gets a $1,000 paycheck and keeps $200 out for spending money. Is there any way that you could be a week ahead of him [maybe borrow the $200 from someone, if you don't have it]?
You be the banker. When he gets paid, have him deposit the entire check and you hand him the $200 cash. You then write out a check to cash for $200 to have ready for the next week.
I wish you much success in your new venture!
Best regards,
June Walker
PS to others: If you haven't read my book and so don't know why you should deposit the entire paycheck amount, please let me know.
june@junewalkeronline.com
888.219.7771 |
