A while back I wrote a blog post on finding a great accountant for your small business. Recently, I decided to take my own advice. I have used the same accounting service for almost a decade, and have always had a great relationship with them.
However, I found that as my small business focus shifted away from a “bricks and mortar” city environment to an online environment mixed with country living, I needed an accountant with different specialties and skills.
Where to Find a Good Small Business Accountant
I’m of the generation who “Googles” everything first. It hardly ever occurs to me to peel open a phone book if online access is just a few clicks away. Digging around on Google, I found several “accountant search” sites, and entered my request on several. Most sites asked for the following information:
- number and types of businesses I owned (sole proprietor, S-corp, etc.)
- number of employees and contractors I employed
- average revenue numbers
- accounting specialties being sought (home business, agricultural, government contracting, etc.)
I was surprised and pleased to receive both an email and a phone call from a representative at GoodAccountants.com. Shahana Faridi, my representative, asked several questions and said she would get back to me within a week with one or more suitable accountants. In fact, she got back to me within a couple of days, and set up an appointment for me with some local accountants.
I had thought she was setting up a phone appointment, and marked it as such in my calendar. Boy was I surprised when Denise and Janni showed up in person! The interview went well, and I will soon be finalizing my agreements for them to handle my small business accounting needs in the coming year.
Is It Time To Reconsider Your Accountant?
The difference between a suitable accountant for your small business and an unsuitable one can be vast. It can be the difference between paying in a huge chunk in taxes every year versus paying a much smaller sum. It can be the difference between sleeping well at night knowing your accountants will back you up with the IRS should the need ever arise, and sweating at night wondering if the other shoe is going to drop soon.
For me, an accountant suitable for my various small business enterprises means someone who knows about home business, the livestock business, the publishing business, and S-corporations as well as C-corporations. I asked a number of probing questions, all of which Denise and Janni answered to my extreme satisfaction. It was a good time to change accounting services, and I am looking forward to my new relationship with Denise and Janni.
What about you? Have your small business accounting needs changed in the recent past, and is it time to re-evaluate your accounting relationship?
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Tags: good small business accountant, goodaccountants.com
Posted by Stephanie Valentine on Sep 8, 2009 in
Small Business Tax Tips,
Small Business Technology 
19 minutes is all it takes me per week to have a worry-free tax season for my small businesses. I timed it, literally. You see, I’ve been studying up on how to maximize my small business tax deductions, and I’ve discovered what it takes to keep the IRS happy:
1. Know the rules as they apply to your business and follow them
2. Keep orderly small business tax documents
3. Have a great accountant
Now that might sound like a lot of work, especially the part about knowing the rules and documenting everything, but it doesn’t take long, really.
Discovering Small Business Tax Deduction Rules
So everyone knows that the IRS has rules, lots of them, and that if you don’t follow them you will get in dutch. What most people don’t know, though, is how to interpret those rules so they apply to you and your small business. And being that the tax code is some 18,000 pages long, it’s going to be pretty hard to figure out which small business tax deductions apply to your organization, and how, just by reading the tax code.
That won’t do at all, which is why you need an interpreter. I like Ron Mueller’s tax tips and books because they are easy for me to understand (check them out at www.homebusinesstaxsavings.com). The website is for home businesses but they apply to a lot of small businesses as well, especially if you keep a home office as well as a regular office. The best way to figure out how IRS laws apply to your business to get help from “Cliff Notes” tax interpreters like Ron. I’ve also gotten great information from other tax books for some of my businesses that are very specific, like my horse business.
Small Business Tax Documents - Maintaining Order
If “location, location, location” is the key to success in real estate, then “document, document, document” is the key to success in reducing your tax burden and defending your position, should the IRS ever inquire. While documentation sounds like a lot of work, it’s really not if you get into a routine. As I said earlier, it takes me on average about 19 minutes per week maintain my small business tax documents.
For anything you want to claim as a business expense or tax deduction, you basically have to document the who, what, when, where, and why. If you keep a strong business calendar or activities diary, most of the documentation can go in there. The rest can go into Quickbooks or some other similar bookkeeping software. If you do your documentation during the day or at the end of each work day, it literally won’t take you more than 19 minutes. I have three small businesses, and it only takes me that long.
For more tips, visit Ron’s website or check out some of the relevant blog posts here:
Proving to the IRS That Your MLM Tax Deductions Are Legitimate, Part 1
Proving to the IRS That Your MLM Tax Deductions Are Legitimate, Part 2, Business Travel
Mileage Deduction - IRS Rules for Recordkeeping
Tax Deductible Business Expenses Even Your Accountant Doesn’t Know About
Deductible Business Travel Expenses Allowed by the IRS
Small Business Owners: How Long Should You Keep Tax Documents?
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Photo credit: Free Digital Photos
Tags: IRS, small business tax deductions, small business tax documents
Posted by Stephanie Valentine on May 22, 2009 in
Small Business Tax Tips 
Which Business Entertainment Expenses are Tax-Deductible?
Let’s say you invite a group of potential business partners into town. You take them to lunch, and later to an evening show. Are both the lunch and the evening show tax-deductible expenses for your business?
Yes. Of course, as always, you have to meet certain criteria to claim both of these expenses. The lunch falls under the category of a direct business entertainment expense as long as these four criteria are met:
1. You expect there will be a future benefit to your business as a result of the lunch.
2. The main reason you are entertaining these people is to conduct business.
3. You specifically discuss business or items that will benefit your business.
4. You footed the bill specifically so that you could talk directly with these people, who can possibly benefit your business in the future.
In addition, the lunch has to meet the criteria of being in a “clear business setting.” Places like restaurants, hotel dining rooms, and meeting rooms all qualify as clear business settings. Therefore, lunch meets this criteria.
Associated Business Entertainment Expenses
That takes care of lunch. Now, what about the evening show? In the past, the evening show would only be a legitimate business expense if it took place directly before or after business was conducted, making the evening show a non-deductible expense. However, the IRS has now made the regulation more generous.
These days, as long as the entertainment, in this case the evening show, takes place on the same day as business was conducted, the expenses is considered a legitimate tax deduction. The evening show is considered an “associated entertainment” expense. As with the lunch expense, half the expense of the evening show can be deducted.
Figuring out which business entertainment expenses are tax-deductible isn’t really that complicated. You just have to have these qualifications clear in your mind, and document the nature of each expense just as you would any other normal business expense.
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Tags: IRS, tax deductible business entertainment expenses
Posted by Stephanie Valentine on May 19, 2009 in
Small Business Tax Tips 
Deductible Business Travel Expenses Allowed by the IRS
Figuring out which business travel expenses are tax-deductible according to IRS regulations can be tricky, especially if you are running on your own business and you don’t want to visit your accountant with every little question. What gets even trickier is trying to decipher whether travel expenses are deductible if you have combined a business trip with some leisure activities.
This article outlines the basic travel expenses that you can deduct as a legitimate business expense. But before diving in, I need to give you a definition, and that is the definition of a business day.
What Does the IRS Consider a Business Day?
Any of these qualify as a business day:
- a day on which you travel getting to and from your business destination
- a day when you spend at least 4 hours on business related activities
- a day when you have a pre-scheduled appointment
The first two are relatively simple to understand. Just be sure you have documentation to back up your travel, such as ticket stubs. On days when you are spending at least 4 hours on business activities, your activity log serves as documentation.
On days when you have a pre-scheduled appointment, you have to be able to prove that you actually attended the appointment. How do you prove it? If you met someone for a meal and picked up the tab, the receipt from the meal serves as proof. Otherwise, you’ll need to print out emails from before and after the trip to the person or people you met. The email from before your trips proves that the meeting was pre-scheduled. The email sent after the meeting (for instance, thanking them for meeting you) proves that you were at the meeting.
Tax-Deductible Business Travel Expenses
Now that we’ve gotten that definition taken care of, let’s get down to the list of items you can deduct from your business travel. The related IRS regulation or publication is listed after each category.
Business Meals
Half the cost of all your meals during actual business days can be deducted. This is true whether you met another person for a meal and picked up the tab, or you ate alone. (1.162-2(a))
Transportation
This usually makes up a bulk of your business travel expenses. These expenses include rental cars, airline tickets, airport shuttles, taxis, and trains. (IRS Publication 463)
Laundry
Any dry-cleaning or laundry expenses associated with clothes that you wore on the business part of the trip can be deducted as a legitimate travel expense. (Internal Revenue Ruling 63-145 and 1963-2 C.B. 86)
Lodging
Any lodging costs, such as your hotel bill, are travel expenses that can be legally deducted. (IRS Publication 463)
Tips, Gratuities, Phone Calls
If you had to tip a cabbie, a porter, or a maid, then you can include these expenses as a part of your travel expenses. These should be associated with business days. Business related phone calls, whether local or long distance, may also be deducted. (1.162-2(a) and IRS Publication 463)
Does that sound simple enough? As always, remember that the devil is in the details, or in this case, the documentation. This article outlines all the legal business travel expenses you can deduct, but you really can only deduct these if they are properly documented. So deduct away as long as your document!
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Photo credit: Patrick Ng
Tags: IRS, tax deductible business travel expenses
Posted by Stephanie Valentine on May 14, 2009 in
Small Business Tax Tips 
This is a question that bugs a lot of small business owners, and I’ve never been clear myself. I’ve heard the numbers 3 years, 7 years, and 10 years thrown around. I decided it was time to find out for myself, straight from the horse’s mouth, so to speak.
You can find the specific IRS regulations regarding how long you should keep paperwork here:
IRS: How long should I keep records?
Be prepared. The first two paragraphs on this web page are pure legalese. Blah, blah, blah. Basically, there is a “period of limitations” for each situation, with the period being different for each situation.
When You Need to Keep Tax Records Indefinitely
There are only two situations when you need to keep your records indefinitely. If you fall into either of those categories, then you and your small business are in hot water anyway, so count on keeping your records forever (or burning them and running to some South American country!). Those two situations are:
1. You file a fraudulent return
2. You didn’t file a return when you should (oops!)
Aside from these situations, you’ll find a complete list of the “period of limitations” for all other situations. The number of years you need to keep your paperwork ranges from 2 to 7 years. Check out the list. If you still have questions, call your accountant to double-check. Remember, the tax code is over 18,000 pages, so be safe rather than sorry!
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Tags: how long to keep tax records, IRS, small business tax documents
If you’re not a bean-counter by nature, then handling the accounting tasks for your small business is probably a giant headache. I’m not a bean-counter either, and my impulse is to find a number-cruncher, and throw all my paperwork to that person as fast as possible.
Not a good idea.
Did you know that the U.S. Tax Code contains over 18,000 pages? And the government keeps adding more pages, addendums, and memorandums to that code every year. Yikes! What does this mean to you as a small business owner?
You need a fabulous accountant.
Actually, you need more than a fabulous accountant. You need an accountant who specializes in your area of small business. If you run a manufacturing operation, you need a specialist who understands how to maximize the tax deductions for manufacturers. If your small business is farming or livestock, you need someone who knows all about IRS Publication 225. I have a couple of businesses, MLM and consulting, so I need an accountant who has the low-down on how to maximize my home-based tax deductions.
Finding a Great Small Business Accountant
To find the perfect accountant for your business, don’t flip through the yellow pages. You’ll just drown in the massive listings there. Instead, follow these three simple steps.
Step 1: Get Referrals
Dig through your network of business acquaintances and ask for referrals from people whom know you well, and who are familiar with your business. You might check with your attorney, your banker, your real estate agent, and your insurance agent. You can also get recommendations from people who own small businesses similar to yours.
Step 2: Conduct Interviews
Remember, your accountant can literally hold your financial future in his or her hands. Don’t be tempted to hand over your bank records to the first recommended accountant. Do your homework first. Be sure the accountant specializes in small business, and has a thorough knowledge of your industry. In addition, find out whether the accountant is more of a paper-pusher (filling out the right forms and sending them in on time) or more of a tax advisor. You’ll want to choose an accountant who matches you goals. If you are willing to do quite a bit of financial research yourself, you won’t need a tax advisor. If you want to focus more on other parts of your business, then you’ll need an accountant who can more actively advise you.
Step 3: Negotiate an Agreement
Most accountants work on an hourly basis when handling normal tax questions or filing simple forms. When it comes to filing federal tax returns, some accountants work hourly while others charge by the page. Find out how your chosen accountant charges for his or her time, and get the deal in writing before proceeding forward. Most accountants, being excellent administrators, will have an agreement already drawn up. If you agree with the terms, all you have to do is sign. If you don’t agree with all the terms, try to negotiate a modified contract, or pick a different accountant. One final point: find out what the accountant charges should you need to defend your tax return to the IRS. Some accountants charge extra fees while others include this kind of work in your tax preparation fees.
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Tags: small business accountant
Posted by Stephanie on Apr 10, 2009 in
Small Business Tax Tips 
Income tax, estimated tax, self-employment tax, social security tax, federal unemployment tax … ack! Are you confused yet? Don’t have “people” to help you figure out which taxes your small business needs to pay?
Before you tear your hair out in sheer frustration, check out the tax resources that are available on the Small Business Administration (SBA) website. The SBA’s online tax section is made for small business dummies. You can literally know nothing about taxes, read the info on the website, and walk away knowing exactly what you need to do.
SBA Online Tax Resources
This guide covers everything from federal taxes to state and local taxes. You will find out exactly which taxes you need to pay, depending on whether you are incorporated, whether you have employees, and a whole bunch of other factors.
Business taxes can be confusing, and just because you own a small business doesn’t mean you automatically know what to do. If you don’t already know which business taxes you are responsible for, do yourself a favor and read through the SBA tax section. You’ll save yourself a lot of trouble with the government later on. And you know what they say about the government:
“It’s a darn good thing we don’t get all the government we pay for!”
When it comes to small business taxes, you definitely need to do the right thing, and then do things right. Get the scoop on the SBA website:
SBA Online Tax Resources
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Photo credit: Get your taxes done
Tags: SBA, small business administration, small business taxes
Posted by Stephanie on Mar 9, 2009 in
Small Business Tax Tips 
IRS Mileage Deduction Rules for Small Business Owners
If you own a small business and drive a vehicle then you’ll want to study the IRS mileage deduction rules so you can maximize your deductions. Whether you know it or not, your car represents one of the largest possible sources of tax deductions for your business.
So what do the IRS mileage deduction rules say you can write off with respect to the miles your drive? There are two areas: straight business mileage and commuting mileage.
IRS Mileage Deduction for Business
Anytime you accrue mileage for your business you can deduct it as a business expense. If you drive from your office to a business meeting and back, you can deduct the round-trip mileage as a business expense. If you drive from your office to the bank and back to your office, you can deduct the round trip mileage as a business expense.
Now here’s the neat part of this equation. Suppose the dry cleaner and grocery store are in the same shopping center as your bank. If you have to go to the bank on business, you can stop at the dry cleaner’s and grocery store after you make a deposit at the bank. The mileage for the entire trip can still be deducted as a business expense, even though you added in some personal errands. As long as the mileage has a primary business purpose, errands are allowed. Thank you Uncle Sam!
IRS Mileage Deduction for Commuting
According to IRS regulations, commuting mileage is not officially a deductible business expense. Specifially, IRS Revenue Ruling 90-23 says, “Daily transportation costs for going between the taxpayer’s residence and one or more regular places of business or employment are non-deductible personal commuting expenses.”
However, there is a way you can get around this regulation. IRS Revenue Ruling 55-109 (often called the “two business location rule”) says, “Daily transportation costs for going between two specific business locations (whether in the same business or different businesses) are deductible business expenses.”
So if you have both a home office and a remote office at a different location, you can deduct your commuting mileage between your house and remote office as long as you follow certain rules. To clarify, let me add that your home office can be for a home-based business, such as MLM or network marketing, or can be the home-office for your regular business, which also has a remote location.
But there’s one more rub. Normally, according to Revenue Ruling 55-109, you would only be able to deduct a one-way trip between your house and your remote office. But there is a way to deduct the full round-trip commuting mileage. Simply be sure that you actively engage in business activities in your home office both before you leave for your remote office and after you come back.
Some More Details on Mileage Deduction
To really make the commuting mileage deduction work in your favor, you need to fulfill a few rules and regulations.
1. Make sure your home office is a principle place of business, which means one of these three items applies to your home office:
- The primary value of your business is delivered there
- You regularly meet with customers or prospects there
- The primary management or administrative function of your business is conducted there
As long as any of these are true of your home office, it counts as a principle place of business.
2. You must document your activity in your home office to prove that you actively engaged in business activities before and after you go to your remote business location. You don’t need to write a book on your activities, but just jot down a few lines in a business diary or spreadsheet. Be sure you are totally consistent by entering data every single workday (not just for 90 days, as for the mileage log below).
3. Keep a mileage log of your driving. Make sure to log every single trip between your home office and your remote office, and vice versa. Also be sure to document every business mile for which you want to claim a deduction. The really great part of this is that according to URS rulings, you only need a keep a mileage log for “a typical 90-day consecutive period” each year to determine your annual business mileage. That’s not bad. Just be sure the 90-day period is fairly typical of your average driving habits.
What is Your IRS Mileage Deduction Worth?
Documenting your mileage and your home-business activities can seem tedious but it can create a giant business expense that you can use as a deduction at the end of the year. In 2009 the IRS is allowing a deduction of 55 cents per business mile driven. If you typically commute 5,000 miles a year, that’s a $2,750 deduction. What’s more, with proper documentation you can also deduct:
- 24 cents per mile driven for medical or moving purposes
- 14 cents per mile driven in service of charitable organizations
So putting pen to paper can really save you a bundle in taxes by creating large mileage deductions. Don’t you think these mileage deductions are worth a little extra time?
What else would would you like to know about saving moeny in your small business?
photo credit: I.R.S
Tags: deductible mileage rules, IRS mileage deduction, irs mileage documentation
