Anyone in business out there... This hurts.

[perry]

I have never made it a secret that I operate a side business as well as hold down my normal full time + job (Power Plant Engineer). As this business really has nothing to do with diamonds I have not mentioned it much.

There was a lot of major plant issues when planning for the spring power plant outage and I did not complete my taxes on time. This is not an issue as I had my accountant file for an extension (routine practice if needed - but I have never done that before).

There were even more issues at the plant than expected during the outage and it ran months longer than expected. Thus, I was not able to get to the taxes in June like I expected.

I did have almost all of it completed by the time I left for my summer business converence which I do as part of my annual vacation from work. I was only a couple items short of giving my organized stacks, with numbers for each stack, for all expense catagories, income, etc.

This weekend I expected to finish it up, and get it all to the accountant early next week.

One slight problem, though. The 2004 business file box was now empty (it was full on July 9).

A little investigation has confirmed that the entire contents of my business file box has been thrown out - and now resides in the regional landfill.

All 2004 business records were included. My bank statements, my credit card statements, my business phone records, my milage log, all shipping & cost papers for everything I recieved. All records of everything I sold, all supplies purchased, my home based business activity log, etc. Everything.

All I have left is a few computer summaries. I do know how much inventory and the gross profit from one part of the business (I have 2 parts to business with 2 income streams), and I do know the cost of one business trip (but have no records to back the trip up).

While it is true that I could get new bank and credit card statements, and even phone records. So much in home based businesses tax land depends on having the reciepts and milelage/activity logs (most of this stuff is paper records that never see a computer).

My 2004 business taxes are now going to be easy. Since I cannot really prove any of my expenses and deductions, I will have to pay taxes based largly on the gross profit (unless my tax accountant knows something for cases like this). I figure that I can demonstrait that the profit from the other part of the business has never exceeded my phone bills - and just call that part of my business and phone bills a wash.

This hurts. I estimate my taxes will be several thousands higher because I have now lost all of my records for expenses and deductions.

I am going to have a really nice conversation with my tax accountant about a method of backup records.

Oh yeh, once it was determined that the records were tossed, and why (what mistake was made - I did not specifically lable the box, and it looked like some other stuff that was being legitimately thrown out in the basement - the records were in my home office) there really wasn''t much to talk about. Yes I was upset, and yes I did another activity for about 3 hours to cool off. But they are gone and there is really nothing more to do than move on and figure out how to restructure the finances for the rest of the year (I''ll recover in a few months).

For those of you in a home based business - do you have a backup for your records - all of your records?

Perry

 

[MichelleCarmen]

No, we don''t have all of our documents backed up. In fact, about a month ago, I shreaded a ton of paperwork in an attempt to streamline my office and then ended up needing a statement I had tossed! Luckily we found a way to get the info even with the lost statement, but I learned my lesson to apply to the future.

Sorry to hear about what happened to you. . .good luck with recovering your documents.

 

[perry]

The most important item for deductions is not recoverable. My milage & travel log. As I understand it; no log - no deduction. There would have been at least 7000 business miles for last year (perhaps more). That''s a good chunk of change to loose.

Let''s see if my accountant has any suggestions. Otherwise I''m not sure that it is worth expending any real effort to rebuild the records.

Perry

 

[fire&ice]

Well, you only need the backup if someone was going to ask for it. One of my mileage books for an entire year was lost at a rest stop. I must have opened the door and out it went. I pretty much knew how much mileage was on it. To me, I had the back up - just lost it. From looking at my calendar, I could sort of create a portion of it; but, I took what I thought was fair.

Things like this happens. I've lost receipts before. For example, years ago my long distance for business calls were substantial. I misplaced a phone bill. I just took a summary of my phone bills divided it by 11 months & took an average for the lost phone bill.

I could be wrong; but, unless something is very askew, I doubt whether an auditor (providing that you have a full blown one) will sort through a shoebox full of receipts.

My feeling is that you incurred legitimate business expenses. I'd take the big ones & try to at least create a paper trail even in your own writing. If it becomes an issue, you could probably dig up hard copies of something - like a gasoline credit card receipt. Frankly, that is how hubby keeps track. Anyone can write down mileage from here to there. The credit card receipt actually shows the location of travel.

Your accountant will probably take the party line. He has to. Don't you hand off your expenses in bulk total (with proper placement on the Schedule C) and not just give him your receipts?

My advice is certainly not one of an accountant; but you have legitimate expenses - AS DOES EVERY BUSINESS. I'm sure you can create some sort of paper trail if necessary. I'm sure your not the first one to loose your stuff.

Good luck.