The Small Business Audit: How To Handle It
Posted by admin on Dec 29, 2007
Avoid Allowing The Tax Auditor’s Guess
If you do find yourself facing a tax auditor and can not produce the records that are needed to substantiate your claim, chances are good that the auditor will just guess at what it should be. In most cases, the auditor legally is allowed to guess and what your income and expenses are if you can not provide accurate records. This is a costly problem and one that you can avoid by keeping records accurately.
Records should include all transactions that take place for your business. If your business makes a sale, pays someone or pays employees, keep a record of it. Keep a receipt or other record of anything that you file as a business deduction, too. Missing any of these will allow you to fall victim to the guess. That will be costly in most cases. All you need to do, though, is to keep an ongoing record for the year to avoid this problem.
Consider The Actual Expense Method Instead For Car Expenses
Posted by admin on Dec 15, 2007
There are two ways that you can deduct your expenses related to your car: the standard mileage method or the actual expense method. Most go with the standard mileage method because it is easier to do (you simply take a specific per mile deduction based on the miles driven.) Yet, you can deduct more if you go the other route.
With the actual expense method, you deduct the actual costs you incur over the year to keep your car operational such as gas costs, repairs, licensing, etc. Even things like your tolls and car washing are deductible. The problem is, you must keep track of all of these expenses if you wish to write them off. You must calculate these things based on how much time you have spent using your car for business needs if it is shared for personal needs. And, if you had specific deductions in the years prior, then you may not be able to use this method.
Party With The Employees, At The Government’s Expense
Posted by admin on Dec 7, 2007
Did you know that if you host a picnic for your employees and their families that the IRS will pick up the tab in the way of a business tax deduction? Entertainment costs for your business are tax deductible. Most of these expenses come in the form of 50 percent. For example, if you take a prospective client out to dinner to impress them, you can only claim 50 percent of the cost of doing so on your taxes.
But, having social events for your employees and their families is 100 percent tax deductible. The reason for this is quite simple: they are a direct result of your business and help you to stay in business. What’s more, you do not need to prove that it was to foster a business goal or related to any end result for your employees. Receipts are required, as usual.
Your Entertainment Is A Deduction?
Posted by admin on Dec 5, 2007
Entertainment costs are often one of the most commonly looked at business expenses on tax forms. The tax laws have changed in regard to which and how much entertainment deduction can be taken. It used to be that a full 100 percent of your entertainment costs related to your business were deductible. That changed a few years ago to just 80 percent. Believe it or not, this has further dropped to only 50 percent.
That means that if you take that client out for a dinner at the most upscale place in town, 50 percent of the cost is deductible, no matter how much you spend. As for what you can deduct as a discount, this includes just about anything from taking clients to a game to a concert are event just having a group over to your home. 50 percent of this is deductible, but do keep your receipts.
Mixing Family With Business Expenses
Posted by admin on Dec 2, 2007
Business travel expenses are one of the most looked at by the IRS. Deductions in these expenses are just fine, in most business travel cases. But, what if you want to take your family along with you? Perhaps you have a business trip in New York and the family wants to spend a few days sight seeing. Can you deduct the costs now?
You can deduct the costs associated with your expenses along, for the business portion of your trip. In other words, your airfare is deductible while theirs is not. Their hotel room is not deductible but yours is. If you all stay in the same room and the cost is the same as it would be for one single person, then the entire hotel expense is deductible. Likewise, while they are sightseeing, the expenses associated with that are not deductible.