tax season is getting closer.... newbie mistakes to watch out for? (in the middle of the reno on SFR#2)

[Account Closed]

started an LLC, actively working on the renovation of SFR #2 (about $17k of anticipated reno costs). Daily trips to the home store for materials and doing all the work myself. Random piles of receipts, some probably still in random pockets :). paid a few people cash for labor. gonna need a large amount of labor shortly, typically hire friends and pay them cash.

I typically just go to H&R Block, another bad move?

I have a bad feeling that I am screwing myself. I go to the home store daily, sometimes more then once. do I really need every receipt? I have a dedicated credit card ONLY for reno stuff, would be great if i could just use the end of year statement as my list of costs but i have a feeling that isnt good enough. 

also, how bad is it to pay cash to a friend for labor, tax wise? typically a few thousand per year is what it adds up to @ $15/hr. is this money going to show as a profit even though it was actually 100% an expense??

and.... who does your taxes? im guessing not H&R block :)

[Natalie Kolodij]

@Account Closed 

I'm a public accountant- My best advise to you is find an awesome CPA and front the money to have them get you all set up. It's worth it. 

I LOVE when our real estate related clients keep quickbooks- it will speed up the process for your CPA and save you money on your return. 

Definitely keep all your receipts. Buy a cheap version of quickbooks. Find a good accountant. 

Issue 1099's to any one you pay > $600 to...EXCEPT LAWYERS- ALWAYS send them a 1099.  (if you have quickbooks- it tells you who needs them and you just stick a form in your printer and print them at year end- easy peesy) 

Have a professional set up your chart of accounts in quickbooks and get everything going. Again- I promise you that paying the money up front saves headaches, audits, and money down the road. 

Cheers!

Natalie