from Fractured Atlas Blog
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6 Tips for Preparing Documentation
by Theresa Hubbard
Well, tax season is upon us, which means many of us who itemize our taxes are scrambling to make sure we have our receipts and other documentation in order. For any of you who are fiscally sponsored, you may have heard from our staff asking for documentation of the expenses incurred when submitting a fund release request. This not only helps us prove we’re providing oversight for how the funds are used, but it also encourages our fiscally sponsored projects to stay organized and get documentation ready before it’s time to file taxes for the project. It can be difficult for those who do not have their documentation easily accessible to release funds and extremely easy for those who do stay organized. Here are 4 tips that you can use to prepare documentation for both a fund releases request and for filing your taxes:
- Track your expenses in a spreadsheet or some other accounting software. This will guarantee that you have all of your expenses in one place so that you can reference them when filing your taxes. If you’re working with an accountant, this will also make it easy for them to see what expenses you’ve incurred that can help off-set the income.
- Keep credit card statements and cancelled checks. These will provide proof of purchase further down the line if you’re asked for it. It is very likely that you’ll lose one or two receipts somewhere along the line, so keeping credit card statements can provide that proof of purchase that your receipts would have otherwise provided.
- Scan and save your documentation. This will allow you to keep receipts, invoices, contracts, etc., in one place, making them easy to find if you’re ever asked to provide them. As far as I’m concerned, there shouldn’t be any reason that you need to keep paper copies of these items if you have them scanned and saved.
- Get signed contracts or invoices if you’re paying employees or artists. Like receipts, this will show what services were rendered as well as the amount due so that there is no question why you paid this person. Signed contracts and invoices are required for releasing funds raised for your fiscally sponsored projects. A Fractured Atlas staff person will be looking for a specific agreement between your company and the person you’re paying to document the expense and services rendered. Payroll stubs can also work for this purpose if you pay your employees using a payroll service.
- Back up everything! Make sure to save all of your files in several places. It would be a shame if your hard drive crashed and you lost all of your hard work because the files weren’t saved elsewhere.
- Save everything for several years. Not only will this help you budget for upcoming projects and operations, but you never know when you might be audited. The IRS has been known to perform audits several years after the end of the year being audited.
Some of these items might seem redundant, but my rule of thumb is that you can never have too much proof when it comes to the IRS. It seems to me that, if you need several forms of identification to become employed, get a new ID or Social Security Card, or even to enter a bar, then you might as well have several forms of proof for your payments when filing your taxes.
If you have all of these items organized, then it should make the process for filing taxes and requesting fund releases relatively quick and painless. Plus, it’ll make your FA staff person and your accountant’s jobs much easier!
from Fractured Atlas Blog