Be sure to deduct every legitimate expense

Amounts you spend in the course of conducting business are generally deductible from the gross income of that business. This includes any start-up expenses. You can claim amounts spent for items ordinary and necessary in your trade or business as a deduction against your income. Otherwise, the amounts are amortized, depreciated, or expensed depending on the nature of the purchases.

The IRS scrutinizes entertainment and meal expenses more than others because of the potential for abuse. You'll need to keep track of the business that was discussed during these events. Other expenses such as computers, and cars are specially classified as listed property because they can be used for both personal and business use. The IRS requires you to keep written documentation of the business use of your car and computer, plus meals and entertainment expenses, so be sure to keep accurate records.

Expenses must be directly related to your trade or business to qualify as a deduction; amounts spent on items that may help you indirectly do not necessarily qualify. However, to decrease your profit, be sure to deduct every legitimate expense that you can reasonably prove. Take advantage of your tax preparer's expertise throughout the year to assist you with tax planning opportunities as they arise.

Tax Tips Small Business

  • Bartering and trading? Each transaction is taxable to both parties

    Sometimes, when the right opportunity presents itself, you may be able to pay for goods and services that you need or want by trading goods that you own, or providing a service that you can perform in return. An example of this is if you own a lawn maintenance company and receive legal services from an attorney and pay for those services by providing an agreed upon amount of mowing and maintenance services at the attorney's home or place of business.

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Small Business Quick Tip

  • Like Kind Exchange

    If you are disposing of property used in your business, you may want to consider a like-kind exchange to defer the taxable gain on the sale.
Thursday, 18th April 2019
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Tax Tips Personal

  • Public Safety Officers Get a Tax Break

    Tax savings for health care costs

    Beginning in 2007, retired public safety officers, or those who have separated from service due to disability, get a tax break for health care costs. If you are a retired public safety officer,

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Personal Quick Tip

  • Adjusting Withholding

    If your tax refund was too high or too low, adjust your withholding so it doesn't happen again next year. You can file a revised W-4 with your employer at any time to increase or decrease the number of exemptions you claim. The more exemptions you claim, the less tax your employer withholds from your wages, resulting in a smaller refund. Decreasing the number of exemptions results in more withholding and a larger refund.