This by no means, coming from your tax professionals, is a complete list of “how-to” or requirements from the IRS. That wouldn’t fit on one piece of paper.
These are some of the things we recommend to our clients to help with your business.
- Form Schedule C is income, as well as a business. We do not recommend using this for
hobbies or random 1099’s - Open a business bank account - It is our policy to treat all transactions in business accounts as business expenses. From time to time we will find a transaction (such as a donation) that may not be a business expense. We will bring these to your attention on an annual basis and review depreciation, amortization, inventory, auto, and non-deductible expenses on an annual basis. Some of the most common non-deductible items are clothing, drycleaning, life insurance (not written for the business), or donations.
- Pay your estimated tax payments
- Track your health insurance deductions (out of pocket payments)
- For reasonable business use of your home (home office or storage), prepare your designated square feet and total square footage of your home. Keep track of usage for your own records.
- Track your mileage (with a handy-dandy mileage book or notebook). If you can keep these records for an audit, that is the best practice in using auto deductions
- Be cautious of Meals & Entertainment & Travel as “reasonable and necessary”
- Keep receipts, and itemized please! Write on them the business purpose (we recommend you keep these with your mileage, just in case!)
- CYA - Cover your accounting -- more tools & resources are available at coveryouraccounting.com
- Ask us, your tax accountants, for any other questions or information for your tax questions
- Research your industry for reasonable expenses so that you stay in line with your industry - we recommend renewing research annually or hiring a business coach to assist you.