Keeping Good Records is Key to Deducting Business Expenses

Tax Record ManagementKeeping good records can pay off big if you deduct travel, business or transportation expenses. They will help protect you from the IRS if your return is ever examined and provide the proof your employer may require if you are reimbursed for business expenses under an accountable plan. Use an account book, diary, statement of expense or similar record to keep the proof that you will need. It’s also a good idea to keep documentary evidence that, together with your records, will support your expenses. Receipts, cancelled checks or bills are examples of some items that you should retain. Receipts are not needed in every case, such as travel and entertainment expenses less than $75 (with the exception of lodging.)

Your records should show the amount, time, date, and place or description and the business purpose for each expenditure. For example, when traveling always record the amount for each separate expense, the city in which it took place, and the business purpose for the trip. The business purpose is especially crucial for deducting meal and entertainment expenses. A substantial and bona fide business discussion must take place directly before, during, or after the entertainment. Generally, only 50 percent of meal and entertainment expenses are deductible.

Automobile usage for business purposes should also be kept in your log. Your log should include the number of miles driven for each use, as well as the information described above. Tolls and parking fees may be claimed in addition to the standard mileage rate that many taxpayers use.

Get More From Your Tax Preparer

Do you find yourself needing advice, a plan for the future, or a trusted resource to help you set goals and stay focused on achieving them? Padgett Business Services ® offers more than just tax preparation and monthly accounting services. We also provide strategic planning through ongoing communication not limited to just tax season.

We can help you focus on tomorrow by customizing a plan for you and your business today based upon your short and long-term goals. Developing a plan early and revisiting it throughout the year will not only help you stay motivated, but will also determine if adjustments are needed to ensure you reach your goals.

gainesville ga tax preparerThe days of meeting with your accountant once or twice a year to report the past is over! By staying engaged with you throughout the year, we can offer tax planning strategies and identify opportunities for real tax savings for you and your business.

With the fast-paced technological age we live in, you need more than just a tax preparer! We have the capabilities to provide you with real-time information, allowing you to make more informed decisions. You need a small business advisor who’s proactive and has the expertise necessary to help your business stay competitive in today’s marketplace. Let us be the trusted resource you turn to, not only for tax preparation but also for future tax planning.

Gain from Sale of Small Business Stock May Be Excluded From Income

small business accounting gainesville gaSmall businesses have been the growth engine of the U.S. economy. Congress has provided a variety of incentives to encourage taxpayers to invest in small business, one of these being the exclusion of gain earned from the sale of qualified small business stock (QSBS). Small business owners may exclude their gains on qualifying C-corp stock issued after September 27, 2010 up to ten times their basis or $10 million from the sale of their corporate stock, whichever is greater. In order to qualify for the exclusion, the stock in the active business must be held by the shareholder for at least five years before it’s sold. Income eligible for this gain exclusion is also excluded from both Alternative Minimum Tax (AMT) and the 3.8% Net Investment Income Tax!

This attractive tax preference had expired December 21, 2013, but has been brought back to life and made permanent with the passage of the Protecting Americans from Tax Hikes (PATH) Act in December 2015. This creates additional opportunities for those planning to acquire or start a new small business. When deciding on which entity type to operate your business, remember this tax advantage for C-Corporations.

For additional discussion on what this means to you, please contact our office.

An Unexpected Tax for Pure E-Commerce

 

7-12-2016 9-07-06 PMRebecca Newton-Clarke, a senior editor/author at Thomson Reuters’ Checkpoint, discusses in this video the corporate income tax implications of e-commerce.  The area of corporate tax on e-commerce is a complex area that is rapidly changing as more and more business begin to conduct transactions over the internet.  Call us to discuss your specific tax situation, and let us help.

Original article from Accounting Today

Tax Deductible Vacations Are Good

Although technology has revolutionized the way we do business, there are still situations where it’s necessary for a face-to-face meeting with staff, management, or customers. With a little planning for the current vacation season, you can mix some leisure time in with your business travel and still get a tax deduction.
 
Deductible Travel Expenses
tax deductible vacationsIf your trip within the U.S. was primarily for business and, while at your business destination, you extended your stay for a vacation, made a side trip, or had other personal activities, you can deduct only your business-related travel expenses.
It’s important to keep records such as receipts, canceled checks, or bills, to support your expenses and be able to prove the number of days spent on business. The following is a list of expenses you may be able deduct depending on the facts and circumstances:
  • 50% of the cost of meals
  • Travel by air, rail, and bus fares
  • Baggage charges
  • Hotel expenses
  • Expenses of operating and maintaining a car
  • Local transportation costs for taxi fares or other transportation to and from the airport
  • Cleaning and laundry expenses
  • Computer rental fees
  • Telephone or fax expenses
  • Tips on eligible expenses
However, these same type of expenses aren’t deductible for non-business days. Personal entertainment costs on the trip, such as a sightseeing tour, aren’t deductible, regardless of the day on which they fall. Cost deductions for a spouse accompanying you on a business trip are allowed only if your spouse is a bona fide employee. Merely having your spouse-employee perform some incidental business service, such as typing up notes from a meeting, isn’t enough to establish a business purpose. Your spouse’s presence must be necessary to your business pursuits – not just helpful.
 
Travel Outside the U.S.
Travel outside the U.S. has its own set of unique rules and recordkeeping requirements. When documenting your business trips outside the U.S., your trip will fall into one of three categories:
  • Travel Entirely for Business,
  • Travel Primarily for Business, and
  • Travel Primarily for Vacation.
The factors which determine the category your trip falls into are related to the number of business days versus total days away. If your trip is less than one week, don’t count the day you leave the U.S. but count the day you return to the U.S. On the other hand, if your trip is more than one week, count both the day you leave the U.S. and the day you return. If your trip wasn’t entirely for business, you must allocate travel expenses on a day-to-day basis between days you did and didn’t conduct business.

Prepare for Summer Storms!

Power outages can wreak havoc on electronic files. Safeguard your personal and business assets by taking the following steps:
business disaster prepBack up your records electronically. Keep a set of backup records stored away from the original set. Remember to scan paper documents into an electronic format!
Document valuables. Photograph or video the contents of your home or business, especially items of higher value, to prove the market value of items for insurance and casualty loss claims.
Update emergency plans. Emergency plans should be reviewed annually and distributed to all employees. Don’t forget the new hires!
Maintain current contact information for employees and customers. Ensure that you can communicate with employees and clients in the event of business disruption. Email is your best method when the phones are down!
Know how to get help. Federal and State agencies can offer assistance, such as FEMA, the Small Business Association, and the Department of Homeland Security. IRS publication 2194, Disaster Resource Guide for Individuals & Businesses, contains information and form needed to claim a casualty loss.

5 Tips to Cope With Tax-Season Stress | Inc.com

Good common sense advice, especially the one about looking forward. Let us know if you have any others….click the link below to see the full article.

5 Tips to Cope With Tax-Season Stress | Inc.com
Does tax season have you feeling down in the dumps? Learn how to use proven cognitive behavior therapy techniques to lift your spirits and heal your wallet.

How to Cope With Tax-Time Stress

Believe me, we know how stressful this time of year can be….it’s crazy for us here in the office. Here are some good tips for making this time a bit more bearable. Of course if you want to really offload some of the stress, let our pros prepare your taxes 🙂
How to Cope With Tax-Time Stress
Experts explain ways to avoid the emotional storms of tax season.

The Most-Overlooked Tax Deductions-Kiplinger

The Most-Overlooked Tax Deductions-Kiplinger
Don’t let a knowledge gap prevent you from taking advantage of these money-saving tax breaks.

IRS’s Top 12 Tax Scams for 2016: The ‘Dirty Dozen’

IRS’s Top 12 Tax Scams for 2016: The ‘Dirty Dozen’
Almost as certain as death and taxes is the perennial appearance during tax season of scammers and evaders.