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5 posts from April 2011

04/01/2011

Small Business Tax Deductions & Recordkeeping

We receive a lot of questions at this time of year about business deductions.  There are many expenses that business owners can deduct to reduce the amount of profit that that will be taxed.  But, for most of these business deductions, there are rules about recordkeeping that the IRS expects you to follow or the deduction may not be accepted.

Here is a short segment on McRuer Money Minutes explaining “Why Recordkeeping Matters”.

There are several common business deductions which have various recordkeeping requirements:

  • Auto Expenses
  • Expenses of Going Into Business
  • Books and Legal and Professional Fees
  • Bad Debts for Goods Sold
  • Business Entertaining
  • Travel Expenses
  • Interest on Credit
  • New Equipment
  • Moving Expenses
  • Charitable Contributions
  • Some Taxes
  • Education Expenses
  • Advertising and Promotions

Many small business owners don’t realize they can deduct the cost of learning more about how to be successful.  With receipts and a true business connection, some of those allowable deductions include:

  • audiotapes and videotapes related to business skills
  • business-related publications like magazines and books
  • seminars and trade shows
  • business association dues

Here are some business deductions that are easy to keep records of, but are often overlooked by business owners:

  • bank service charges and credit bureau fees
  • casualty and theft losses
  • on-site coffee and beverage service
  • consultant fees
  • office supplies
  • online computer services related to business
  • petty cash funds
  • postage
  • taxi and bus fare for business purposes
  • parking and meter fees

Business owners who properly track all of their expenses year round end up saving more on their tax bill.  That’s because they not only remember to list all their deductions, but they also have the documentation to prove their claims.

April 18th Deadline Approaches

Good News!  You have a few more days to file your 2010 personal income tax returns--- that is, Forms 1040, 1040a or 1040EZ.  The deadline this year is April 18th, a few days later than the usual April 15th deadline.  But if an extra weekend will still not allow you the ability to have your taxes completed and filed on time, then you may consider filing an extension.

Requesting an extension, using Form 4868, provides you an extra six months to file your completed return.  Your final tax return would be due October 17th.   Yet, don’t forget that even if you are filing an extension regarding the submission of your tax return, it should NOT be thought of as an extension on your obligation to pay.  If you don’t pay what you owe to the IRS for your 2010 taxes by April 18th, you face penalties and interest.

The IRS has more details available online on this year’s tax deadlines.

Give Yourself a Chance to Think

So often, busy people like you are too consumed with putting out fires to step back and consider the big picture.  It’s vitally important to give yourself a chance to think. 

Let’s face it, today we often have more to do than the day’s time allows.  It’s affecting our ability to think things through clearly and make the right decisions when it comes to our money.

There are more considerations than ever before about how we use our money and where we place it to make it grow.  Our resources are limited and varied, and there are different methods to determine how well our choices are working.  It’s confusing and hard to plan and execute how things work together.

That’s why McRuer CPAs is offering our new service package called Decision Maker Plus. It gives you the ability to gather together all your financial data and strategies in one place at the same time, to ensure everything works together to meet your goals.

Take a look at our introductory brochure on Decision Maker Plus.

Through Decision Maker Plus our team of CPAs can provide you a way to coordinate all your plans and present them in a way that makes sense to you.  We can help you analyze, plan and implement strategies to meet your goals while coordinating with your other approved professionals.

Using Decision Maker Plus gives you access to our experienced team and…

*proactive planning and strategy implementation,
*priority response communications,
*cutting-edge and highly efficient information sharing technology,
*secure online data storage and data sharing portals,
*and flexible scheduling for after hours or weekend appointments.

Our Decision Maker Plus Services include:

  • Income Tax Planning
  • Estate Tax Planning
  • Wealth accumulation and Protection Services
  • Business Startup, Planning and Expansion Services
  • Generational and Spousal Wealth Transfers assistance
  • Financial Services Incident to Divorce
  • Services for Liquidity Events
  • Education Finance Planning
  • Retirement planning and more.

Think about it. 

Do you really know if everything works together to help you?  If not, call us for a confidential consultation about your goals and we’ll give you a half hour of that consultation for free.

Why Use a CPA?

To avoid sounding self-serving, I will begin by sharing my thoughts about when you don’t need a CPA.  If you have a simple tax return, one filed using Form 1040EZ (absent claiming credits for lower-income taxpayers), or your Form 1040 reports a standard deduction, then preparing and submitting the return yourself is fine.  However, if yours is a more complicated tax situation, if it takes a lot of time for you to prepare the return, or if you have questions about the tax code, (e.g. your eligibility for deductions, and more), you should consider engaging a professional who is a practicing CPA.

Take a minute to listen to “Why Use a CPA” from McRuer Money Minutes for more thoughts.

A CPA is a certified professional, literally a Certified Public Accountant.  He or she must deliver professional services meeting specific standards and tough regulations.  By law, to prepare others’ tax returns, he or she must also maintain continuing education on all laws governing taxation to keep that certification. 

There is more to it than tax preparation.  A CPA is trained to think beyond completing your tax returns by computing your tax payment strategies in a way that matches your current financial goals, your history and your future plans.

High standards also help you receive more accurate, comprehensive and trustworthy service.   A CPA is there for you year after year and understands your long-term needs.  Most CPAs are in business as a business, and you won’t see them set up a short-term office for just tax preparation services which disappears in a few months.  These standards assure you that you’re getting a quality service.

Having someone like a professional CPA on your side year-round is a major advantage for you.  It allows you to focus on ‘big picture’ tax-saving strategies and overall business and financial decisions.  As an individual, your CPA can help you identify tax savings you might miss if you wait until year end. If you’re a business owner, engaging a professional offers even more advantages because they know all the perks and pitfalls that can occur throughout the year regarding what you owe in taxes. 

For those of you who use packaged (and sometimes free!) tax preparation software, consider this:  Do you really know the hundreds of tax law changes that can occur in just a few years?  Software packages have access to large information data bases, but if you don’t know the questions to ask, you may not be getting the answers you need to accurately compute your tax obligation.  Additionally, while many terms in the tax laws use common-language words, they have special meanings in the tax code.  Who’s responsible if (or when) you make a mistake?  CPAs meet a lot of their new clients when they are called after-the-fact to fix “I did it myself” tax filings.

Another key feature more advanced firms like McRuer CPAs offer is a secure method to store your confidential tax information and records.  Paperless electronic filing systems provide faster, more secure information transfers with virtually unlimited storage space.  You’ll be able to find and file records with ease and enjoy the confidence of knowing that your records are safe in a highly secure storage environment.  Your CPA can review your records with you easily and note issues that need more information quickly, and you’re doing your part for the environment.

We all know time is money.  Though you will have to take some time to gather and organize your tax records, CPAs save you time from the beginning by taking care of the trouble it takes to complete complicated filings. Yes, CPAs charge by the hour for their services, but you’ll find it well worth it, not just for the time you save, but also because a professional accountant provides more accurate results saving you time and trouble from mistakes. Perhaps most important, you will have confidence knowing that you will pay only the taxes you owe.

Your CPA can offer a wide range of tax preparation and personal financial planning help.  Increasingly, people turn to CPAs for retirement planning, planning education funding for their children, estate planning, and help with the financial impact of life-changing events like marriage, serious illness, death, and divorce. 

Think about using a CPA, because, in the end, it’s about more than your annual taxes.

Here’s a link to more information from the Missouri Society of Certified Public Accountants.
www.mocpa.org

Welcome from McRuer CPAs!

Hello Everyone! This is Scott McRuer and I’m excited about this online opportunity to share information with you on a regular basis, as well as learn your thoughts. I will be online live as often as my schedule allows. In the meantime, I will be reading your comments continually and will answer your questions as quickly as possible. I also hope you will feel free to contact call us directly at McRuer CPAs to discuss any issues regarding tax preparation and planning strategies for both individuals and businesses. We may be reached at either www.kccpa.com or 816-741-7882.

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