Loans From or To Related Parties

Sometimes to get along, you have to get a loan. The Company may need funds, and you may lend some of your personal money to your Company. This is perfectly legitimate, but make sure there is a written promissory note, with some reasonable interest rate, and some reasonable payment schedule. It can go in the […]

Inventory

If you have items you sell at retail or wholesale, you probably will not have bare shelves at the end of the year, so you have to count your inventory. I recommend that you make a list of all your items and their unit cost. Then just count the number you have in stock and […]

Reasonable Compensation

C-Corporations. If you pay yourself too much payroll, the IRS may claim that part of the payments should have been dividends. If the auditor reclassifies, it will lead to double taxation. S-Corporations. If you pay yourself too little payroll, the IRS may claim that part of the other payments to yourself should not have been […]

Gifts To Employees

Bonuses. It is not necessary to give employees Christmas or Year-End bonuses. It’s entirely voluntary. But many business owners do; so here is how it works: Non-Cash Gifts. If you give a turkey, a fruitcake, or any other food item, it is not income to the employee, but the cost is deductible to your business. […]

Entertainment

Here are some quick facts about business entertainment expenses that small business owners should keep in mind. –          Typical types of deductible entertainment expenditures are sporting events, rounds of golf, hunting, fishing, theater, social clubs, nightclubs, and concerts. –          Club dues are not deductible. You cannot deduct hunting leases, nor dues paid to country clubs, […]

1099-MISC/W-9

Since we’re right at the end of January, it seems like the appropriate time to talk about 1099s, so that’s what this month’s tax tip is about. 1099-MISC: These should be sent to anyone that was paid by the business at least $600 for services during the year.  This includes rents, services (including parts and […]

Mileage Logs

It is terribly inconvenient to keep track of mileage. However, since a vehicle can be used for personal trips as well as for business purposes, and frequently is, the IRS requires substantiation. The only solution is to keep a mileage log. Fortunately, there are now applications that you can download onto your phone or computer, […]

Business Meals

Some quick facts about business meals that small business owners should keep in mind. –          In-Town Meals are deductible (usually 50%) if you have a reasonable expectation that the customer or prospect who you are treating will generate some income for your Company. The documentation required is the date, location, amount, who was there, and […]