High Enterprise Tax Deductions
For Non-Enterprise PERSONAL Deductions: https://youtu.be/W-U07iKrCmA
This Video is for the highest 10 enterprise tax deductions which might be most frequently misused, misunderstood, missed, and/or abused…
00:03:46 – What’s deductible? All Strange and mandatory bills…
00:06:30 – Skip Intro, go to HOME OFFICE EXPENSES
00:11:21 – VEHICLE EXPENSES
00:18:04 – INSURANCE EXPENSES
00:24:08 – CHARITY AND POLITICAL CONTRIBUTIONS
00:27:41 – MEALS AND ENTERTAINMENT
00:31:27 – TRAVEL EXPENSES
00:36:53 – EMPLOYEES AND SUBCONTRACTORS
00:41:02 – RETIREMENT AND DEFERRED COMPENSATION PLANS
00:43:25 – WRITING OFF OPEN RECEIVABLES, PAYABLES, AND INVENTORY
00:49:19 – START-UP EXPENSES AND OTHER EXPENSES PAID OUTSIDE OF BUSINESS BANK ACCOUNTS
00:51:08 – BONUS: QUALIFIED SMALL BUSINESS AND PASSTHROUGH ENTITY DEDUCTION (Sec. 199A)
Most new entrepreneurs ask they accountant this actual widespread query: “Which bills are deductible for my enterprise?”
The reply I give to all my shoppers is: “Any expense that’s mandatory, unusual, cheap, documented, and authorized could also be deductible…” …and what do these phrases imply?
* Strange: means it’s generally accepted within the business and seen typically with different companies in the identical commerce
* Essential: means the expense was required as a way to generate the enterprise earnings or it was incurred as a consequence of the earnings producing actions. But it surely doesn’t should be indispensable as a way to be deductible
* Affordable: that is very subjective, however in essence it means it isn’t lavish or extravagant
* Documented: signifies that the taxpayer has the burden of proof to show the expense existed, that the quantity reported is correct, and it has a real enterprise function (mandatory)
* Authorized: the expenditure can’t break any legal guidelines, be thought of a bribe, or made in connection to an criminality / or exercise through which the enterprise doesn’t gave the authorized capability to carry out
It additionally additionally price mentioning that there are 10 tax deductions very generally missed, misused, and/or abused, and people are:
1. Residence Workplace Expense: Steadily failing to doc the sq. footage of the house, making a business-only atmosphere, and doc its enterprise function is the commonest subject
2. Automobile Expense: mixing private and enterprise use of autos and never correctly monitoring milage is a big are of non-compliance
3. Insurance coverage: Specifically with well being and life insurance coverage, which have very particular guidelines as a way to be deductible.. in lots of instances these could NOT be deductible if guidelines usually are not adopted
4. Charity and Political Contributions: For pass-through entities, similar to S-Firms and Partnership/LLC’s, charity is “deductible” solely on the persona return, however most taxpayers can’t get any profit for it due to commonplace deductions. Political contributions are NEVER deductible
5. Meals & Leisure: the “leisure” issue actually impacts the deductibility of this bills. NOTE: in 2018, there are vital modifications within the tax code for Leisure bills
6. Journey Bills: incessantly combining private with enterprise journey is a big priblem
7. Workers and Subcontractors: not correctly accurately categorizing staff or contractors and reporting them as such; which can result in massive payroll tax penalties or disallowance of contractor bills
8. Retirement and Deferred Compensation Plans: failing to incorporate ALL the workers within the firm plan and/or not profiting from the earnings deferral tax deductions
9. Correct Write-off: of open invoices/receivables which might be deemed uncollectible, open payments/payables that won’t be paid, and adjusting Stock amount/valuation. For ACCRUAL-BASIS taxpayers
10. Pre-startup prices: made earlier than the enterprise began and.or in connection to establishing the enterprise. Additionally some enterprise house owners are likely to “cowl” enterprise bills with private funds or private bank cards (exterior of the enterprise financial institution accounts) and neglect to register it within the enterprise books
11. BONUS: Part 1099A… Extra to come back
my e-mail: hector@garciacpa.com
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