Every person or business owning an asset or some amount has to pay some considerable amount. Sometimes these taxes become a burden on your shoulders, resulting in business failures and losses. In such situations, you can file a case for a tax refund or deduction.
To claim a tax deduction, you must have a backup of evidence and proof to prove that your income is not as much as it looks like. It is always better to keep your records up to date and safe to deal with these tax deductions and make your case stronger. You will fail to get a tax deduction if you do not have evidence of your financial statements. That is why organizations keep their financial books safe and hire experts to keep these records daily or yearly.
Keep scrolling down the article to know what documents you must keep making your tax deduction claim stronger and increase the chances of reducing your tax amounts.
Top 5 documents you must have to prove your case
Factual evidence has great power over verbal justifications. It has become crucial for businesses to keep a proper record of their business transactions and expenses to deal with tax claims and refunds. The burden of proof is all about having factual evidence, and these pieces of evidence make your case stronger and increase the chances of tax refunds.
The following are some of the most important that you must keep safe as a business to deal with tax refunds and claims.
1. Travel expenses
A business may include travel expenses with all other expenses. It must keep a record of these travel expenses in their financial records, e.g., in the balance sheet. While recording these expenses, do not forget to record your departure date, timings and month, etc., as these are your operating expenses and necessary to perform business activities.
It is crucial to enlist your operational and non-operational expenses in separate books to reduce complexities in understanding your financial records. For making the record simpler and easier to understand, businesses opt for bookkeeping and accounting firms in Dubai to keep their essential records in separate books that are easier to understand and make decisions based on these understandings.
Below are some of the other expenses that are associated with travel expenses for a business.
- Hotel stays
- Bus or train ticket costs
- Food expenses
- Car (oil) expenses
2. Income statements
Your profit and loss amounts play a considerable role in identifying the amount of tax you need to pay. Businesses that do not develop their financial statements for each period fail to justify their tax refund claims. The law firms will make decisions based on these income statements because you will get fewer tax reductions if you have higher profit margins. If your income statement expenses are overpowering the profits, you will get a higher amount of tax reduction.
3. Transaction records and invoices
Your accounts receivable and payable are key determinants of your business performance and profits. It is crucial to keep a record of every transaction, irrespective of the transaction amount. For the burden of proof, these transaction records and invoices are essential evidence as these invoices enlist the consumer and seller name along with the date and time of the transaction. Despite being important, you do not have to keep the invoice records of many previous years; only invoices of a few past years will do the job for you.
4. Bills and other expenses
Bills are the amounts any business owes and has to pay in later stages. For example, if a business is purchasing some items from a manufacturer, then they receive a bill containing a certain amount they need to pay these manufacturers. Other bills and expenses for a business may be maintenance expenses, labor and employee payments, and electronic equipment costs. All these expenses and bills will determine the cash flows for a business, depending upon which you will be paying your tax amounts.
5. Investment statements
A business may include some non-operational costs and incomes, and they must have a record and proof for these costs and incomes. For instance, a business may be generating some revenue from the investments they have made other than their core activities. Not being able to prove the sources of income could lead to penalties and more tax payables. So, hire the experts from the bookkeeping and accounting firms in Dubai to keep proper documentation of your business expenses and income against each investment to help you make better financial decisions and identify the exact amount of tax you need to pay.
Tax claims and refunds are easier to a playoff with proper financial records!
If you are a business carrying the burden of proof, then there is only one way out to win your case, and that is with factual evidence and account records. To deal with your tax refunds and claims, you always need to provide evidence, and for that, you need to hire experts for maintaining these critical financial documents.