Archive | Bookkeeping

RSS feed for this section

Accounting Capitalization Policy

Technically the IRS requires businesses to capitalize (depreciate) all assets that have a life of longer than a year. Which might not sound that bad, but it would create a lot of headaches for smaller businesses trying to keep track of everything. Imagine maintaining a depreciation schedule with staplers, chairs, etc. Luckily the IRS recently […]

S-Corp health insurance

For S-Corp owners (anyone who owns more than 2% of the stock, and includes their family members), the corporation is not allowed to take a deduction for the health insurance premiums it paid unless the amount is included on the owner’s W-2. You’ll need to work with your payroll provider to make sure the amount […]

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, […]

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 […]