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Quick Tax Tips For The Tax Season (Tip #35)

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Tax Deadline for Many Farmers and Fishermen Was Two Days Ago...Lets Get Ready For Next Year!!!


Here is a word from the Goodfellas at the IRS:

Recordkeeping Guidelines for Fishermen

Kind of Records to Keep
Except in a few cases, the law does not require any special kind of records. You can choose any recordkeeping system suited to your business that clearly shows your income. If you are in more than one business, you should keep a complete and separate set of records for each business.

Your recordkeeping system should include a summary of your business transactions. This summary is ordinarily made in your books (for example, accounting journals and ledgers). Your books must show your gross income, as well as your deductions and credits. For most small businesses, the business checkbook (discussed later) is the main source for entries in the business books. In addition, you must keep supporting documents.

Supporting Documents
Fish sales, crew shares, and other transactions you have in your business will generate supporting documents. Supporting documents include fish tickets, paid bills, invoices, receipts, deposit slips, and canceled checks. These documents contain the information you need to record in your books.
It is important to keep these documents because they support the entries in your books and on your tax return. Keep them in an orderly fashion and in a safe place. For instance, organize them by year and type of income or expense.

Gross receipts
Gross receipts are the income you receive from your business. You should keep supporting documents that show the amounts and sources of your gross receipts. Documents that show gross receipts include the following:


  • Fish tickets and fish ticket summary reports
  • Cannery statements
  • Bank deposit slips
  • Form 1099-MISC
  • Receipts books

Purchases
Purchases are the items you buy and resell to customers. This is generally not applicable for a commercial fisherman. However, if applicable, your supporting documents should show the amount paid and that the amount was for purchases. Documents for purchases include the following:

  • Canceled checks
  • Cash register tape receipts
  • Credit card sales slips
  • Invoices

Expenses
Expenses are the costs you incur (other than purchases) to carry on your business. Your supporting documents should show the amount paid and that the amount was for a business expense. Documents for expenses include the following:


  • Cannery statements
  • Crew settlement agreements
  • Canceled checks
  • Cash register tapes
  • Account statements
  • Invoices
  • Credit card sales slips
  • Petty cash slips for small cash payments

Petty Cash
A petty cash fund allows you to make small payments without having to write checks for small amounts. Each time you make a payment from this fund, you should make out a petty cash slip and attach it to your receipt as proof of payment.

Assets
Assets are the property such as boats and gear that you own and use in your business. You must keep records to verify certain information about your business assets. You need records to figure the annual depreciation and the gain or loss when you sell the assets. Your records should show the following information.


  • When and how you acquired the asset.
  • Purchase price
  • Cost of any improvements
  • Section 179 deduction taken
  • Deductions for depreciation
  • Deductions taken for casualty losses, such as losses resulting from fires or storms.
  • How you used the asset.
  • When and how you disposed of the asset.
  • Selling price
  • Expenses of sale

Documents that may show some of this information include the following.


  • Purchase and sales invoices
  • Real estate closing statements
  • Canceled checks


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Name: Jamaal Solomon





   

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