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Using credit cards for certain or all of your purchases is a great way to prepare for tax season. Business owners have long used accounts for their businesses separate from their personal accounts to help with the end of the year calculations. Besides being able to write off the interest, the statements help to categorize and account for tax-deductible expenditures.
Individuals can also use credit cards in the same way to prepare for taxes. Many items like medical expenses can be itemized for personal taxes, if you have an accurate accounting of the amounts. Likewise, entrepreneurs and work-at-home businesses can use credit card statement itemizations for tax preparation.
The Advanta Business World MasterCard was designed specifically for small businesses and start-ups alike. The size of credit limit is based on your credit history, so with excellent credit score you will maximize your benefits from Advanta. You can shift large balances without bothering your head about some $300 or $500 or even more that you will be charged just for a transfer.
Computerized Tax Preparation Programs
Another benefit of using credit cards is that many tax preparation programs, like TurboTax, will automatically update your records by downloading your credit card statement from your credit card company’s website. This eliminates the need to have to manually enter each transaction. If you set up your categories appropriately, the information can be automatically obtained and entered ready-to-go for tax preparation. Once everything has been entered, you can even use the credit card to pay for electronic filing of your taxes.
Using Credit Card Statements to Track Receipts
If you are a family relying on a credit card to make all of your monthly purchases, you could find tax-time to be a breeze. Now, instead of digging through a shoe box of receipts, finding receipts that somehow made their way under the driver’s seat of your car, and extracting receipts from the depths of your purse – you can simply go over 12 months of credit card statements to highlight the expenses you need to report on your taxes.
In some cases, credit card companies will even issue you a year-end statement with all of your expenses categorized for you – making your job of entering the total figures even easier and less time consuming. Credit card statements serve as proof of purchase in the same way receipts do, so keep a binder or file folder handy and save your credit card statements each month.
One card, the Discover Business Card offers an excellent business credit card solution with many benefits, more than other business credit cards. There is never an annual fee on the card and 0% APR for the first 12 months on purchases, free additional employee cards and an itemized statement for each card to track spending.
Time Saving Tip
One time saving tip is for you to consider using more than one credit card to further reduce time spent categorizing your business expenses.
If you wanted to really make good use of credit card statements, you could designate credit cards for specific types of purchases. Use one credit card for all personal purchases that would not apply to your taxes; use another for all home maintenance expenses; another for medical expenses. Use cards based on what you typically file on your taxes, and designate one credit card for each type of expense.
For most people this would be considered “overkill” but depending on your unique situation, having statements of your annual expenses per category could be very beneficial and reduce the amount of time you spend searching for appropriate receipts and records to use at tax time.
The Simply Cash Business Card from American Express you can off set many of your most costly expenses thanks to a top of the line rewards program. When you combine the cash back program with no annual fee and a low APR, it is easy to see why so many business owners are relying on the Simply Cash Business Card.
Additionally, if you are concerned about the potential for credit card fraud when you use a credit card online, you may want to limit one credit card for all online transactions. This limits your risk to just the one credit card, although online security has come a long way and the potential for online fraud is not as high as many people believe. This is just an option for having some peace of mind when using your credit card details online.