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

  • Business Mileage Rate

    Instead of deducting the actual expenses for the business use of your vehicle, opt for the standard mileage rate. In 2016, you can deduct 54 cents for each business mile you drive.
Monday, 17th June 2019
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Tax Tips Personal

  • IRA Contributions for Military Personnel

    Nontaxable combat pay is considered compensation

    Members of the military serving in Iraq, Afghanistan, and other combat zone localities can now put money into an IRA, even if they received tax-free combat pay. Under the Heroes Earned Retirement Opportunities (HERO) Act,

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Personal Quick Tip

  • Sales Tax Deduction

    The optional sales tax deduction has been extended for the 2016 tax year. This means you can elect to deduct your state sales tax in lieu of your state income tax when you itemize deductions.