- Investment Opportunities
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- Video Series – Into To Hassle-Free Cashflow Investing Philosophy
- INTRO PART 1 – Intro To Hassle-Free Cashflow Investing
- INTRO PART 2 – Learning real estate investing vocabulary
- INTRO PART 3 – Get Higher Returns with Less Invested
- INTRO PART 4 – Getting From Where You Are To Where You Want to Be
- INTRO PART 5 – Taking The Hassle Out Of Your Real Estate Investing
- INTRO PART 6 – Formulas – Using Arbitrage To Increase ROI
- INTRO PART 7 – Understanding Leverage Ratio
- INTRO PART 8 – Calculating ROI Using Leverage Ratio And Arbitrage Spread
- INTRO PART 9 – Increasing Arbitrage Spread Magnifies ROI
- INTRO PART 10 – Property, Location, Team, Financing, and Expectations
- INTRO PART 11 – How To Make Money With Real Estate Investing
- INTRO Part 13 – Are Passive Investments in Real Estate Right for You?
- Video Series – Real Estate Math
- Lesson 1 – Calculating Return on Investment
- Lesson 2 – How and When to Use ROI (return on investment)
- Lesson 3: Calculating Gross Scheduled Income, Adjusted Gross Income, Net Operating Income
- Lesson 4: Calculating Operating Expenses
- Lesson 5: Calculating Capitalization Rate
- Lesson 6 – Calculating Interest Rate
- Video Series – Real Estate Investor Training Webinars
- Secrets of Self-Storage Investing
- Real Estate Collection Agency Secrets For Improving Your Real Estate Profits
- Chasing Infinite Returns with Real Estate Investor Financing
- How to Build Your FICO and Use It for Real Estate Profits
- Cash Management Strategies for Real Estate Investors
- Partnering for Profit
- Introduction to NNN Lease Commercial Real Estate Investing
- Cashflow Investing for Prosperity and Happiness
- Cashflow Investing Strategies for Recessionary and Inflationary Times
- Creating Your Life By Design
- Keys to Successful Property Management
- Tackling Success: From the NFL to Professional Investor With Professional Athlete Terrence Robinson
- Strategies for Protecting Your Income and Wealth from Rising Inflation
- Video Series – Tax / Accounting / Self-Directed IRA Investing
- A Real Estate Investor’s Comparison of IRA, ROTH IRA, and 401(k)
- Tax Planning Strategies For Cashflow Real Estate Investors
- Year End Tax Strategies for Business Owners and Real Estate Investors
- Using A Self-Directed IRA to Create Hassle-Free Cashflow
- The Ultimate Tax SmackDown Event: Solo(k) versus IRA
- Back to Basics Bookkeeping For Real Estate Investors and Business Owners
- Using A Self-Directed IRA When Your Income is High But Your Balance Is Low
- Taxmaggedon: tax strategies to Protect Yourself From Tomorrow’s Taxes!
- Creating Powerful Retirement Accounts for Business Owners & Real Estate Investors
- Falling in Love with Real Estate Bookkeeping
- Real Estate Investor Tax Deductions and Investing Strategies
- Why Do Hassle-Free Cashflow Investors Love Texas Real Estate
- Hassle-Free Cashflow Investing Secrets
- Hassle-Free Cashflow Lending Secrets
- How to Avoid UDFI Taxes When Investing in Real Estate with your IRA
- Eight Best Kept Secrets About Investing with your IRA
- A Guide to 1031 Exchanges
- Top 20 Things Every Business Owner Needs to Know
- Recordkeeping: Keep the Receipt or Lose the Deduction
- Managing Your Properties with QuickBooks
- Powerful Cash Management Strategies
- 17 Steps to a Successful Joint Venture
- Get a Fast Fifteen Points on Your Credit Report
- 12 Warning Signs You’re Headed For A Lawsuit With Your Partner
- choosing entity type
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- Negotiate Better Lender Terms
- Foreclosure Process
Record keeping – Keep the Receipt or Lose the Deduction
Time after time, there are rulings from the IRS stating someone lost their deductions due to bad record keeping.
Karen Hough had to pay $100,849 in taxes because she “estimated” the business expenses. She relied on her testimony to prove the deductions, while the IRS required documentation. She did not have cancelled checks or receipts. The IRS could see she spent money, but because she could not prove the items purchased, the deductions were denied. There were no excuses.
I had someone ask me why they should keep their receipts when they charge all their business expenses on a credit card. The reason why you keep a legible receipt is that if you are in an audit, the IRS will NOT accept the line on a credit card statement saying you purchased items from Staples. They need the original receipt or a readable copy. If you don’t have the receipt, the auditor can say that you purchased school supplies for your kids and not believe you purchased office supplies for your business. The deduction would be denied. Do you save all your receipts? Do you copy the thermal receipts because they will fade after 2-3 years?
To keep your record keeping life as simple as possible, have one business checking account. Run everything through this account. This way you can track income and expenses in one place. I pay $1 a month to have my business checks mailed back to me so I don’t have to print copies of checks online. I know most banks go back months or even a few years, but if you are audited, it can be 3 years later and who wants to print each check online? Plus, I work with many banks and some don’t go back 3 years. I have had clients have to pay large bank fees to get copies of checks. No fun!
The IRS requires that you keep a log of your business miles. This includes starting and ending odometer, date, business miles driven and business purpose. Your calendar and your receipts will help indicate where you drove. Don’t forget to count your deposit runs to the bank!
You need to train yourself (and your staff) NOT to use cash. Cash is so hard to track. If you lose the receipt, you probably won’t remember what you purchased…thus missing a deduction you were allowed to take.
For meals and entertainment expenses, you are required to document who, where, when, why and how much. You have to indicate WHO you were with and why you entertained this person.
So how long do you need to keep your receipts? You can amend a tax return (or be audited) 3 years back. However, if you underestimated your income, the IRS can go back 6 years. If you did not file or filed a fraudulent return, the IRS can go back many years as they want. Also, if you purchase assets and they are depreciated over a period of years (5, 7, 15 years), you need the original receipt for that period of time.
Bottom line is that you need to PROVE everything you purchase for your business. Do you have written documentation that if you were audited there would be no change in the taxes due? I hope so!
Renee Daggett is the president of Administrative Bookkeeping Co., Inc. She received a bachelor’s degree from San Jose State University in 1989 and is an Enrolled Agent tax preparer (enrolled to represent tax payers before the IRS). Renee is also the author of “Your Financial Flight Plan: Pilot Your Business To Profitability.” In her book, she demonstrates in a creative way the reasons why every business owner needs to be a better manager of his/her business.
Renee Daggett, Enrolled Agent
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