•3 Rules to Simplify Your Recordkeeping for Business Travel
Summer is here and for many of us that means summer business trips. I love traveling for business. It usually means I'm on my way to speak at a seminar in a great location. But, my least favorite part about business trips is keeping track of all of my receipts.
I use to come home from a business trip and find my receipts in various places over the next several days (or weeks!). Some I would find in my wallet, others in my briefcase, more in my coat pocket, some in my car and with all of...
•5 Questions for Your Mid-Year Tax Planning
When I coach clients on their tax strategy to legally reduce their taxes, many of the strategies require monitoring throughout the year. The monitoring serves two primary purposes:
#1 To Monitor the Numbers
Many tax strategies are based on income and expenses being at certain levels. It is not uncommon for these numbers to change during the year. Certain changes can impact the effectiveness of the tax strategy so it is critical to know if the numbers change so changes can be made to the...
•A Checklist to Properly Document Your Meals and Entertainment Expenses
One thing you can always count on during an audit is a request for documentation supporting meals and entertainment expenses. The IRS has found that these expenses are heavily abused and are an easy way to generate additional tax revenue, not to mention additional revenue from penalties and interest.
You don't have to spend a lot of time reading tax cases to find one where meals and entertainment expenses were disallowed specifically because of improper documentation.
*Here are a few...
•Are Your Meals 50% Deductible or 100% Deductible?
? There are several specific rules to determine if a meal is a legitimate business expense. These specific rules include meeting the business purpose requirement and the ordinary and necessary requirement. In this article, it's assumed that the meal has met these requirements and is indeed a business expense.
*General Rule
Meals are generally 50% deductible. This means when a business pays for a meal, only 50% of that amount is deducted on the tax return. It's extremely important to know...
•Entity Formation Fundamentals
One of the most important steps in any tax strategy is determining what entity should be formed to hold your businesses and investments. For legal purposes, there are four basic types of entities: sole proprietorship, partnership, corporation and limited liability company. The entity you choose should take into account both the tax effects of the entity and the legal aspects of the entity.
-Sole Proprietorship- Let's examine the tax and legal aspects of each entity, beginning with the sole...
•How to Deduct Your Travel Expenses
Travel expenses are a favorite deduction of many clients, because they love to travel and especially enjoy it when the IRS is subsidizing part of the expense. In order to deduct travel expenses, however, you must show that the expense has a business purpose and is ordinary and necessary to the business.
Travel expenses that have a business purpose include:
- Meeting customers/prospects/vendors residing in a different location; - Searching for investment property; - Meeting with business...
•Is Your LLC a Sole Proprietorship, a Partnership, a C Corporation or an S Corporation?
? The Limited Liability Company (LLC) is a terrific tax entity. The number one reason is its flexibility. Specifically, an LLC can be taxed as:
a sole proprietorship a partnership a C corporation an S corporation
An LLC is not a tax entity, it is a legal entity. As such, an LLC can choose how it wants to be taxed.
Do you know how your LLC is taxed? If your LLC did not make an election, then it is taxed as the "default classification." The default classifications are:
If your LLC has...
•Meals & Entertainment: What Is Deductible and What Is Not?
? Probably the most common business deductions are meals and entertainment. However, people are often confused about whether the expenses are fully deductible, partially deductible or not deductible at all.
50% Deductible
The general rule for deducting meals and entertainment expense is that 50% of the cost is deductible provided the following requirements are met.
Requirement #1
The expense has to be ordinary and necessary in the trade, business, or profession. In other words, it must be...
•Mid-Year Tax Planning: Do You Need to Add an Entity?
? Do you need to add an entity to your tax structure?
This is such an important question for mid-year planning because knowing the right time to add an entity to your tax strategy can often save as much as $10,000 per year in taxes!
What entity should you consider adding to your tax structure?
Many of you want to know what entity you should consider adding to your tax structure. There are 2 levels of tax planning to consider in answering this question.
** Level #1 **
This level is for...
•New Tax Legislation Could Save Dentists $$Thousands$$ in 2008
New Tax Legislation Could Save Dentists $$Thousands$$ in 2008 Have you thought about upgrading your equipment to the newest industry standards but were afraid of the cost? Or perhaps you want to improve your office to make it more comfortable for your patients? Do you need to upgrade your reception area to make it more efficient for your administrative staff or look nicer for your patients?
If you have been thinking about any of these improvements for your practice, consider that if you...
•Standard Mileage Rates Are Increasing: Find Out How Your Home Office Can Help You Deduct Even More
Standard Mileage Rates Are Increasing: Find Out How Your Home Office Can Help You Deduct Even More With gas prices on the rise, the IRS has announced an increase in standard mileage rates effective July 1st. For business miles, the rate is increasing from 50.5 cents per mile to 58.5 cents per mile.
Who is impacted by this increase?
- If you reimburse your employees or are an employee that gets reimbursed for mileage, be sure the rate is the increased rate as of July 1st (assuming your...
•The Biggest Mistake With C Corporations and How to Save Taxes Using the C Corporation Double Tax
When used correctly, C Corporations are a great way to supercharge a tax strategy. I find that when my clients make the most of their C Corporations, they reduce their taxes by a minimum of $10,000 every year.
- The Biggest Mistake With C Corporations -
The key to saving $10,000 in taxes every year is knowing how to use a C Corporation correctly. When I meet with prospects and review their prior year tax returns, it's not unusual that I find a C Corporation that isn't being used correctly....
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