Recordkeeping Files: You must keep records to correctly figure your taxes. Your recordsmust be permanent, accurate, complete, and clearly establish yourincome, deductions, and credits. The law does not require you to keeprecords in any particular way. But if you have more than one business,you should keep a complete and separate set of books and records foreach business. Publication 583 provides information about setting up arecordkeeping system, the types of books and records included in atypical system for a small business, and sample records. Publication 463 provides information on the records to keep if youuse your car in your business. The following are suggestions for keeping adequate businessrecords. Keep a business bank account. Deposit allbusiness receipts in a separate bank account. Make all payments bycheck, if possible. Then both business income and business expenseswill be well documented. Make a record. Record all your businesstransactions in separate account books, and keep a monthly summary ofyour business income and expenses. Support your entries. File canceled checks, paidbills, duplicate deposit slips, and other items that support entriesin your books in an orderly manner and store them in a safe place. Forinstance, organize them by year and type of expense. If you cannot provide a canceled check to prove payment of anexpense item, you may be able to prove it with certain financialaccount statements. These statements must show either a checkclearing, a credit card charge, or an electronic funds transfer. Ifthe account statement shows a check clearing, it must indicate thecheck number, amount, payee's name, and the date the check amount wasposted to the account. If the account statement shows a credit cardcharge, it must indicate the amount charged, payee's name, and thedate charged. If the account statement shows an electronic fundstransfer, it must indicate the amount transferred, the payee's name,and the date of transfer. Keep your records. You must keep your businessbooks and records available at all times for inspection by the IRS.You must keep the records as long as they may be needed in theadministration of any Internal Revenue law. You should also keepcopies of your tax returns to help prepare future returns or fileclaims for refunds. Caution: erstklassige Hotels in KatowiceProof of payment alone does not establish that you are entitled toa tax deduction. You should also keep other documents as discussed inProving Your Deductions, next. Proving Your Deductions The IRS may ask you to prove your deductions for business expenses. Travel Expenses For travel expenses, you must be able to prove the following items. Each separate amount you spent for travel away from home,such as the cost of your transportation or lodging. A receipt, bill,or other documentary evidence generally is required for all lodgingexpenses. You can total the daily cost of your breakfast, lunch,dinner, and other incidental travel costs if they are listed inreasonable categories, such as meals, gas and oil, and taxifares. The dates you left and returned home for each trip, and thenumber of days spent on business while traveling away fromhome. The destination or area of your travel, described by thename of the city or town. The business reasons for your travel or the business benefityou gained or expected to gain from it. Entertainment Expenses For entertainment expenses, including entertainment-related meals,you must be able to prove the following. The amount of each separate entertainment expense. You maytotal incidental expenses, such as taxi fares and telephone calls, ona daily basis. hotel a YorkThe date the entertainment took place. The name and address or location of the place you went.Include the type of entertainment, such as dinner or the theater, ifthe information is not clear from the name or designation of theplace. The occupation or other information about the people forwhom you are claiming a meal or entertainment expense. Include theirnames, titles, or other information sufficient to establish theirbusiness relationship to you. ERROR MSGThe business reason for the entertainment or the businessbenefit you gained or expected to gain from it and the nature of anybusiness discussion or activity that took place. The presence of you or your employee at a business mealgiven for a client. Business discussion.If the entertainment took place before or after a substantial andbona fide business discussion, in addition to the information in (1),(2), (3), (4), and (6) above, you must be able to prove all of thefollowing. The date, place, and duration of the businessdiscussion. The nature of the business discussion. The business reason for the meal or entertainment or thebusiness benefit you gained or expected to gain fromentertaining. The identification of the people who participated in boththe business discussion and the entertainment activity. Business relationship.If you entertain a readily identifiable group of people, you do nothave to record the name of each person. It is enough to designate thegroup. For example, if you entertain all the members of a garden club,an entry such as "members of the Hillcrest Garden Club" isenough. Gift Expenses For gift expenses, you must be able to prove all of the following. The cost of the gift. The date you gave the gift. A description of the gift. Your reason for giving the gift or any business benefit yougained (or expected to gain) from giving it. The occupation or other information about the personreceiving the gift, including name, title, or other informationestablishing a business relationship to you. The name of the recipient of a business gift does not alwayshave to be recorded. A general listing will be enough if it is evidentthat you are not trying to avoid the $25 annual limit on the amountyou can deduct for gifts to any one person. For example, if you buy alarge number of tickets to local high school basketball games and giveone or two tickets to each of a number of customers, it is usuallyenough to record a general description of the recipients. Records You should keep the proof you need for your travel, meal,entertainment, and gift expenses in an account book, diary, statementof expense, or similar record. You should also keep adequatedocumentary evidence that will support each element of an expense. You do not have to record information in your account book thatduplicates information shown on a receipt if your records and receiptscomplement each other in an orderly manner. Keep your records up to date. Record your expenses in your accountbook at or near the time of the expense. Entries made later, when youmay not remember them accurately, do not have as much value as entriesmade at or near the time of the expense. Separating expenses.Usually, each separate payment you make must be recorded as aseparate expense. For example, if you entertain someone at dinner andthen go to the theater, the dinner expense and the cost of the theatertickets are separate expenses. You must record them separately in yourrecords. Expenses of a similar nature occurring during the course of asingle event will be considered a single expense. For example, ifduring entertainment at a cocktail lounge you pay separately for eachserving of refreshments, treat the total expense for the refreshmentsas a single expense. hotel rooms ArendalSome items can be totaled in categories. You can make one dailyentry for such categories as taxi fares, telephone calls away fromhome, gas and oil, and other incidental travel costs. Meals should bea separate category. Include tips with the costs of the services youreceived. Documentary evidence.A receipt or bill is often the best evidence to prove the amount ofan expense. Documentary evidence is needed for all your lodgingexpenses unless, under an accountable plan, your employer pays you aper diem reimbursement of no more than the government rate in effectat that time and in that area. It is also generally needed for anyother expense of $75 or more. Documentary evidence will ordinarily be considered adequate if itshows the amount, date, place, and essential character of the expense.For example, a hotel receipt is enough to support expenses forbusiness travel if it has the name and location of the hotel, thedates you stayed there, and separate amounts for charges such aslodging, meals, and telephone. A restaurant receipt is enough to provean expense for a business meal if it has the name and location of therestaurant, the number of people served, and the date and amount ofthe expense. If a charge is made for items other than meals andbeverages, the receipt must show that this is the case. Canceled check.A canceled check, together with a bill from the payee, usuallyestablishes the cost. However, a canceled check by itself does notprove a business expense without other evidence to show that it wasfor a business purpose. Incomplete records.If you do not have adequate records to prove an element of anexpense, you must prove the element by providing both of thefollowing. Your own statement, whether written or oral, containingspecific information about the element. Other supporting evidence that is sufficient to establishthe element. Additional proof.You may have to provide to the IRS additional information toclarify or establish the accuracy or reliability of informationcontained in your records, statements, testimony, or documentaryevidence.