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cibula11
09-12-2011, 03:57 PM
I have yet to get my business license, but have a job for next spring. I'm purchasing a tractor this evening, but since I'll be paying cash, I wondered how that will work for a tax write off. Should I create a make-shift receipt or will I even need that?

In general, do you use a record book, or how do you keep books?

GreenI.A.
09-12-2011, 04:33 PM
Not sure what state you are in, by I talked to my CPA about something simular this past spring. i purchased a some attachments for my dingo and the guy would only take cash, I wanted to pay by check or even bank check/money order and told him I would pay him and once the check cleared I would then pick up the parts. He wouldn't do it, he insisted on cash, turns out he had decleared bankruptcy and needed to hide as much cash as he could. My CPA told me to purchase it and then to sell it to my company. So I took the cash out of my personal checking account and bought it with that. I then made up a simple receipt and sold the parts to the company name, and cut myself a business check. I also had to save all communication with the original seller such as the craigs list ad, there were no emails, so I called the seller after I ourchased the parts and asked him some questions. I then told him I had an emergency and needed to get off the phone but asked him to call me back and leave the answers on my vmail. This way if I am audited I have a receipt I bought the parts from myself and proof I bought them from the original guy too

cibula11
09-12-2011, 04:40 PM
Not sure what state you are in, by I talked to my CPA about something simular this past spring. i purchased a some attachments for my dingo and the guy would only take cash, I wanted to pay by check or even bank check/money order and told him I would pay him and once the check cleared I would then pick up the parts. He wouldn't do it, he insisted on cash, turns out he had decleared bankruptcy and needed to hide as much cash as he could. My CPA told me to purchase it and then to sell it to my company. So I took the cash out of my personal checking account and bought it with that. I then made up a simple receipt and sold the parts to the company name, and cut myself a business check. I also had to save all communication with the original seller such as the craigs list ad, there were no emails, so I called the seller after I ourchased the parts and asked him some questions. I then told him I had an emergency and needed to get off the phone but asked him to call me back and leave the answers on my vmail. This way if I am audited I have a receipt I bought the parts from myself and proof I bought them from the original guy too
Thanks. I already took cash from my personal account, so writing a check to myself might work....when I actually get a business account set up. I also thought about printing a generic template for a receipt and see if he would mind signing it as proof.

DavesLL
09-12-2011, 06:29 PM
IRS requires receipts; you only show them if you are audited. You don't even *have* to show the receipts to your tax preparer; the IRS requirement is the preparer has to have a good faith belief the deductions are legitimate. Of course, you (or the preparer) has to sum the receipts to enter the correct number for the deduction(s), so someone has to run through and do some addition. Since most preparers will charge you an hourly rate to do something like that with your receipts, you should really sit with a calculator and do the addition yourself.

Files are important. Get a file box and some folders. All receipts go into the folder you label "receipts" or "expenses" or something. Get some paperclips or rubber bands or something, and some paper or post-it notes. When you sum the receipts, clip them together and label with the date range and the sum. Now you don't have to re-add them again if it comes up at some point. If you want to be fancy, make sure the receipts are clipped together in chronological order.

I personally wouldn't buy something from someone who's not willing to provide a receipt, not for business purposes anyway. I have receipt blanks, and all they have to do is sign it for me. I'd have told the guy I'll pay cash, but I'm going to fill out a receipt for the purchase and he has to sign it. When he asks why, I'd tell him straight up it's for my business records in case the IRS inquires into one of my returns. If that was too much for him, then I'd probably not buy from him.

GreenI.A.
09-12-2011, 10:34 PM
One other reason for a receipt on this to is he is selling you a tractor which has a serial number. He could simply sell it to you for cash and then report it stolen and say that you have it. Here you are with out proof you paid for it, and him holding paperwork with the serial number proving that he purchased it. Police would most likely return it back to him and you would have to prove to the courts that it is rightfully yours.

Darryl G
09-12-2011, 10:48 PM
I always insist on a bill of sale with make, model and serial number and name and address of the seller and signed by both of us. If they're not willing or capable of writing one up, write it up yourself and have them sign it.

I use Quickbooks for my accounting. When I first started out I hired an attorney and accountant to get me set up.