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Useful Tax Information

 
  

Always stay up to date on the current mileage rates: 

https://www.irs.gov/tax-professionals/standard-mileage-rates

The more organized you are the better off you will be in case of an audit of course.  If the IRS asks for mileage logs they will expect to see an ongoing effort vs an after the fact "catchup" in preparation of the audit.

Purpose of Mileage Log

To claim a deduction for transportation expenses related to business or medical care, you must be able to provide the IRS with the exact number of miles you traveled during the year. The list must also be itemized based on the reason for each time you traveled. In the event of an audit, the IRS will request a copy of your mileage log to verify each of your deductions. If you cannot supply this information, the IRS may require you to submit an amended tax return.

Appropriate Documentation

The IRS requires taxpayers taking deductions for transportation expenses to record the mileage they travel during the year using trip sheets, statements of expense, logs, diaries, account books or similar records. Your mileage log should be professional in appearance and easy to understand -- incomplete or unprofessional mileage records can lead to problems in the event of an audit.

Recording Mileage

Your mileage log should include the exact mileage you traveled during each qualifying trip you made, as well as the total number of miles you traveled during the year. The log should also include the date you made each trip and the name of the destination to which you were traveling. Finally, the log should contain the purpose of the trip with an explanation of how it relates to your business.

Claiming a Deduction

When you claim your deductions for medical and business transportation expenses, you can calculate each deduction using either the standard mileage rate or the amount of each qualifying transportation expense. Using the standard mileage rate, you will deduct a flat amount of money for each qualifying mile you traveled. Using the amount of your individual expenses, you will deduct the percentage of each qualifying expense that related to qualifying miles. For example, if 40 percent of your total mileage qualified as business mileage, you can deduct 40 percent of each qualifying expense. Regardless of the method you choose, you must use information from your mileage log to complete the calculation.

Considerations

Because qualifying expenses and standard mileage rates differ, taxpayers should keep separate mileage logs for business and medical travel. For example, insurance is a qualifying expense for business travel, but it is not a qualifying expense for medical travel. Taxpayers must also calculate business and medical deductions separately. 

 

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Recordkeeping

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Why should I keep records?
Good records will help you monitor the progress of your business, prepare your financial statements, identify source of receipts, keep track of deductible expenses, prepare your tax returns, and support items reported on tax returns.

What kinds of records should I keep?
You may choose any recordkeeping system suited to your business that clearly shows your income and expenses. Except in a few cases, the law does not require any special kind of records. However, the business you are in affects the type of records you need to keep for federal tax purposes.

How long should I keep records?
The length of time you should keep a document depends on the action, expense, or event the document records. You must keep your records as long as they may be needed to prove the income or deductions on a tax return.

How long should I keep employment tax records?
You must keep all of your records as long as they may be needed; however, keep all records of employment taxes for at least four years.

How should I record my business transactions?
Purchases, sales, payroll, and other transactions you have in your business generate supporting documents. These documents contain information you need to record in your books.

What is the burden of proof?
The responsibility to prove entries, deductions, and statements made on your tax returns is known as the burden of proof. You must be able to prove (substantiate) certain elements of expenses to deduct them.


 

Bookkeepers, Accountants vs CPAs.  What are the differences? 
At this time of year small business owners always have the same confusion on the differences between bookkeepers, accountants and CPA's.  I am an accountant with a 4 year degree.  I also have over 30 years of experience at Senior levels with two large corporations,  
As such, the State of Arizona has no authority for licensing as they do with CPA's. I am unable to do the work of a CPA such as filing taxes or giving out advice at the level of CPA's.  However with that said, if you are a small business owner on a tight budget it just makes good sense to use an accountant to do the simple day to day accounting functions such as billing, payables, bank and credit card reconciliations.  As a degreed accountant I am able to do most of what is needed to keep a solid and accurate set of financials for most any business, but a CPA or Tax Preparer will always have final review rights on what is actually allowed on the tax filing. 
There are good and bad bookkeepers and accountants just as there are good and bad CPA's.   I have taken over some real messes caused by sloppy and shoddy work from all levels of this business. 
As a result I have nearly 95 percent retention of my clients over the years. The 5 percent that are no longer with me closed their doors for relocation, retirement or family issues.   
I work closely with CPA's on a regular basis all across the Valley for any of my clients that want me to handle that communication so they don't have to be bothered by it.  Accountants such as myself charge 1/3rd of what a CPA charges in most cases for simple date entry and accounting functions.  A CPA won't usually get detail into your accounting software using Quickbooks.  (At least the ones I have seen and dealt with, they usually hire accountants to do the Quickbooks part of the detailed work)  CPA's (again, the ones I have worked with) most likely put in higher level lump sum entries.  I offer my clients detailed work on a daily or weekly basis then I wrap it all up for month end for them all; again with their CPA or tax person having the final review.  
I am registered with the IRS as a separate business entity and I carry all the necessary E&O and Liability Insurance to protect my clients and any future clients against fraud.  I have seen first hand, the damage that an unethical accountant can do to a business and it makes our entire profession look bad.  
So.... if you are a small business owner ask for references, ask for current clients contact names and phone numbers and also ask for the names of any CPA's that the accounting services you are considering hiring.  
My references, names and numbers are all available to anyone that asks, no problem.  
Have a great business day all  
http://work.chron.com/differences-between-bookkeepers-vs-accountants-vs-cpas-4173.htmlcountants vs CPAs.  What are the differences? 
At this time of year small business owners always have the same confusion on the differences between bookkeepers, accountants and CPA's.  I am an accountant with a 4 year degree.  I also have over 30 years of experience at Senior levels with two large corporations,  
As such, the State of Arizona has no authority for licensing as they do with CPA's. I am unable to do the work of a CPA such as filing taxes or giving out advice at the level of CPA's.  However with that said, if you are a small business owner on a tight budget it just makes good sense to use an accountant to do the simple day to day accounting functions such as billing, payables, bank and credit card reconciliations.  As a degreed accountant I am able to do most of what is needed to keep a solid and accurate set of financials for most any business, but a CPA or Tax Preparer will always have final review rights on what is actually allowed on the tax filing. 
There are good and bad bookkeepers and accountants just as there are good and bad CPA's.   I have taken over some real messes caused by sloppy and shoddy work from all levels of this business. 
As a result I have nearly 95 percent retention of my clients over the years. The 5 percent that are no longer with me closed their doors for relocation, retirement or family issues.   
I work closely with CPA's on a regular basis all across the Valley for any of my clients that want me to handle that communication so they don't have to be bothered by it.  Accountants such as myself charge 1/3rd of what a CPA charges in most cases for simple date entry and accounting functions.  A CPA won't usually get detail into your accounting software using Quickbooks.  (At least the ones I have seen and dealt with, they usually hire accountants to do the Quickbooks part of the detailed work)  CPA's (again, the ones I have worked with) most likely put in higher level lump sum entries.  I offer my clients detailed work on a daily or weekly basis then I wrap it all up for month end for them all; again with their CPA or tax person having the final review.  
I am registered with the IRS as a separate business entity and I carry all the necessary E&O and Liability Insurance to protect my clients and any future clients against fraud.  I have seen first hand, the damage that an unethical accountant can do to a business and it makes our entire profession look bad.  
So.... if you are a small business owner ask for references, ask for current clients contact names and phone numbers and also ask for the names of any CPA's that the accounting services you are considering hiring.  
My references, names and numbers are all available to anyone that asks, no problem.  
Have a great business day all  
http://work.chron.com/differences-between-bookkeepers-vs-accountants-vs-cpas-4

Your first responsibility for paperwork and regulations for new employees comes before hire.  Before the employee starts work and receives his or her first paycheck, there are some forms you are required to have the employee complete.  These forms must be completed by every employee. 

1. Form W-4 for Federal Income Tax Withholding

All new hires must complete Form W-4 before receiving their first paycheck.  This form includes information on marital status, number of dependents, and designated additional withholding amounts.  Employers should not give employees advice on how to complete this form.

2. State Income Tax Withholding Form

Contact your state department of revenue (or equivalent) for information on how to register as an employer in the state.  This state agency will also give you information on withholding forms and requirements for reporting and paying withheld amounts.

3. Form I-9 for Employment Eligibility

Form I-9, Employment Eligibility Verification, must be completed by each new hire.  The new employee must also provide a proof of eligibility, such as a birth certificate or "green card.”

4. Job Application Form

Each new employee must complete a job application form, even if this person has already submitted a resume for the job.  The job application form contains information about the new employee that can be verified, like previous employers and education.  It also includes several statements the applicant must sign.  One statement attests that the information on the application is true and correct, while other statements allow the employer to conduct reference checks and background checks.

5. Use the E-Verify System to Verify Employment Eligibility

Employers can sign up for the E-Verify system and use it to check on the eligibility of new employees to work in the U.S.  The system uses the information on Form I-9 to compare with federal data bases.

6. Register with State Employment Notification System

Employers must register new employees with their state's new hire notification system; this registration allows the state to collect child support payments from these employees.  A list of the state notification systems is included in this article.

7. Where to Get Copies of New Hire Forms

This article details sources of forms and you will need new employees to complete at hire. 

 

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