What is record keeping?
It is a system that captures, manages and provides access to records through time, and it can either be electronic or paper system. Well run businesses set out on a purpose to establish and set up appropriate record keeping systems to store data and important details for reference (tax and audit purposes). Either method is acceptable to the IRS. Under Fair Labor Standards Act (FLSA), employers must keep payroll records for at least three years. In addition, if you have employees you must create and keep records, including payroll tax records, withholding records, and employment tax returns and you must keep these records for four years, see IRS Circular E, Employer’s Tax Guide.
What income and expense records every landlord needs and how to develop a record keeping system that works for them?
Landlords need just two types of records for tax purposes: a record of rental income and expenses, and supporting documents for the income and expenses. In cases audited by IRS, receipts and other supporting documents serve as insurance. Landlords need records for the income and expenses to figure out if rental activity earned a taxable profit or incurred a deductible loss during the year which they need to summarize the rental income and expenses for each rental property in the tax return (IRS Schedule E).
The Landlord has several options that they can choose from depending on their ability or capability to manage the record keeping system. One can create his own personal use spreadsheet, personal finance, property management and small business accounting software.
To fully grasp the concept of record keeping, it is but significant to always understand first what information need to be recorded or what records need to be kept like: employee documents, tax documents, tenant’s documents etc.
But wait—want to make your experience as a landlord even more better? That’s where we come in. Here at Camuso CPA PLLC, we do have the ability to offer s property tax services and other services that you may need. Our years of expert knowledge and experience, can help you, as a landlord, in handling all tax and accounting needs. If you are interested to know more about this and how this might benefit your business, please don’t hesitate to give us a call today. One of our friendly and knowledgeable representatives will be happy to answer any questions you have. You deserve a partner that can help you succeed, so let’s talk -call us now!