Archive | Bookkeeping

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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 […]


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. […]


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 […]