Some people may advise you to take a very liberal approach to the “business expenses” you claim as deductions, but if you’re caught claiming unqualified expenses, you’re going to be penalized.
You need to be careful with making deductions related to your car. According to the IRS, you are allowed to deduct the full cost (with some limits) of your car’s operations if your car is used for business purposes only. However, if you use your car for both business and personal use, you may only deduct the cost of its use for business.
Additionally, most business owners and employees are only entitled to deduct 50% of the cost of meals while traveling for business, entertaining customers or attending a conference. In most instances, trying to deduct more than 50% of these meals or deducting meals not related to business is a recipe for trouble. Remember to always keep your receipts for business meals and write down the business purpose of each meal and who you were with. The onus is on you to prove the legitimacy of these expenses.
Claiming a home office is tempting for small business owners who work out of their homes. However, you need to pay careful attention to IRS guidelines on home office deductions. According to the IRS, “you must regularly use part of your home exclusively for conducting business” to qualify for a home office deduction.
Before you start calculating the square footage of your home office and deducting a percentage of your rent or mortgage, think carefully. As with most IRS regulations, complexities and exceptions exist. If you’re unsure whether your business expense deductions are acceptable. For more information call Mike McVay 850.725.5696
You need to be careful with making deductions related to your car. According to the IRS, you are allowed to deduct the full cost (with some limits) of your car’s operations if your car is used for business purposes only. However, if you use your car for both business and personal use, you may only deduct the cost of its use for business.
Additionally, most business owners and employees are only entitled to deduct 50% of the cost of meals while traveling for business, entertaining customers or attending a conference. In most instances, trying to deduct more than 50% of these meals or deducting meals not related to business is a recipe for trouble. Remember to always keep your receipts for business meals and write down the business purpose of each meal and who you were with. The onus is on you to prove the legitimacy of these expenses.
Claiming a home office is tempting for small business owners who work out of their homes. However, you need to pay careful attention to IRS guidelines on home office deductions. According to the IRS, “you must regularly use part of your home exclusively for conducting business” to qualify for a home office deduction.
Before you start calculating the square footage of your home office and deducting a percentage of your rent or mortgage, think carefully. As with most IRS regulations, complexities and exceptions exist. If you’re unsure whether your business expense deductions are acceptable. For more information call Mike McVay 850.725.5696
