Good records essential says IRS

THTNK OF all the bad luck that ! might possibly befall a new business: an earthquake on your first sales day, ants in your inventory, a cash register that subtracts instead of adds.

Still, nothing could be more ruinous to your young firm than poor business records.

Good records are essential to efficient management of a lumber and building materials business. They help you keep tab on your profits, prepare credit applications, keep track of inventories, and prevent pilferage.

There are also plenty of tax advantages in keeping good records. Good records enable you to take the full amount of all legitimate deductions.

For example, there is a host of information that you need to properly compute your depreciation deduction. For any piece of depreciable equipment, you must know the date the asset was acquired, its costs, whether it was acquired new or used, the salvage value of the asset, and the method used to compute depreciation. But all this information can be conveniently maintained in a depreciation record, so that you will have it at your fingertips at tax time. Remember. an overlooked

Irs Booklets For Small Businesses

These booklets are available free by dropping a postcard.to your IRS district office:

Publication 583, "Recordkeeping for a Smdll Business"

Publication S52, "Recordkeeping Requirements and a Guide to Tax Publications"

Publication 509. "Tax Calendar and Checklist for 1976"

Publication 538, "Tax Informotion on Accounting Periods and Methods"

Publication 534, "Tax Information on Deprcciation"

Publication 535, "Tax Information on Business Expenses"

Publication 539, "Withholding Taxes from your Employee's l|ages" deduction could cost you more in extra tix.

Publication 533, "Information on SelfEmployment Tax" -and many others.

The 1976 edition of the "Tax Guide for Small Business" (Publication 334), is also available by mail for $1.25 from the Superintendent of Documents, U.S. Government Printing Office, Washington, D.C.20402.

The capital gain-andJoss provisions of the income tax law are another reason you should keep good business records. When you sell or exchange property, your gain may receive preferential tax treatment or the Internal Revenue Service may restrict the amount of loss claimed, depending upon what kind of property it is, how long you held it, and how you disposed of it. To take advantage of these provisions of the law, your records must show the date an asset was acquired, what it was used for and whether it was sold, traded, destroyed or otherwise disposed of.

Good records also identify the source of the cash and property you receive in your business. While many of these receipts will be taxable, others will not. For example, issuance of stock, money or property pumped back into the company, loans, and certain exchanges of property are among the transactions that are not subject to income tax. Unless you have records identifying your receipts, you may be unable to substantiate that some are nontaxable.

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