Taxes can be one of the worst parts of owning your own business, as you may be sharply reminded at this time of year. With constantly changing rules and regulations, proper record keeping is one of your most important business tasks.
While most of the information required at tax time can be found in your accounting system, sometimes things slip through the net—which is when your PSA solution can help. There are two specific sets of information that your PSA can assist with.
Depending on your location, you may be able to deduct the usage of your personal vehicle as an expense. In order to expense mileage, you must keep records of your travel to and from clients and vendors. It is very easy to forget to record mileage at the time it occurs. When this happens, you can recreate those logs by searching your PSA for all the onsite visits you made. Keep in mind that your records must often include odometer readings, so you need to do this frequently.
The other record-keeping item that your PSA can help with is inventory. For many businesses, items sold do not get expensed until they are invoiced. This is called Cost of Goods Sold or COGS. Until it is sold and expensed, an item remains on your balance sheet as an asset. Your PSA can help you in two ways here:
Your PSA tool is the main repository of information of where you were, what you did, and how you did it. This information can help fill in gaps that may have not been recorded and captured by your accounting software. Filling in those gaps can help ensure the recording of your revenue as well as expenses is as accurate as possible before calculating your taxes.
Eric Anthony is principal of customer experience at SolarWinds MSP. Before joining SolarWinds, Eric ran his own managed services provider business for over six years.
You can follow Eric on Twitter at @EricAnthonyMSP
Disclaimer: This document is provided for informational purposes only and should not be relied upon as legal advice on taxation. SolarWinds MSP makes no warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of any information contained herein.