For bigger tax deductions, follow these best practices courtesy of CPA and small business specialist Susan Chubbuck.
- An efficient tax vehicle. The best way to track auto expenses is to get it right from the start. As in taking note of your odometer on January 1 each year. Log your business miles. You can keep a log book in your glove compartment, or use a Quickbooks app on your phone. It’s also smart to track appointments on your phone or computer calendar, then print it out at the end of the year. Pro tax tip: If you work from home, business mileage starts when you leave the house. If you drive to an office, technically speaking the distance between where you live and work is not business mileage.
- An unappetizing change. While meals still earn a 50% deduction, entertainment expenses are no longer allowed. So, track business-related meals out and report them to your tax preparer. Pro tax tip: If you are unsure what constitutes a business meal, ask your tax professional.
- Fixed assets vs. office supplies. It can be confusing to decide whether an expense should be counted as office supplies, which is deducted on the year you had the expense, or a fixed asset which is deducted over time. Susan’s advice: Don’t decide. Make a note of all expenses and let your tax preparer make the call.
The bottom line: Operate your business like a business. Keep good records. Jot things down as soon as possible. And you’ll come out ahead.
Susan Chubbuck, CPA is a native Californian with 32 years tax experience. The easiest way to reach Susan is by sending a text to 949-510-1058.