Ah, taxes – a mandatory thorn in your side.
What to expense, what to allocate, what to deduct and what to account for… it's quadruple the headache for an entrepreneur.
If you are an entrepreneur who gets your taxes done for you, you're still not in the clear, as you still have to gather all your statements and receipts. And for those small business self-filers out there, here are some tips to prevent getting audited:
- Just because you are wearing your company t-shirt to the gym doesn't make your sport drink purchase a business expense!
- That fancy weekend home you rent? Even though you plan to dream about your business there, it is not an expense line item.
- And how about those groceries you bought in order to keep your sustenance for the big investor meeting? Nice try, not deductible.
- Those antidepressants you are taking because you just lost your biggest client? Nope, probably won’t be approved.
- How about those toys you bought for your son to make up for not being there when you missed his game because deadline? Good one, but not happening.
- And then there is home theatre system that you bought to unwind after a long day of work? Negative!
Of course the above points are just possible examples of #entrepreneurfail. Just to be on the safe side, if you have any doubts, run your taxes by an accountant. You also may want to consult a tax accountant for the following questions:
- What is the best type of business or corporation to create?
- Are there certain states it is better to incorporate in?
- What is the best way to handle taxes for employees?
It may save you some pain in your “Audit nerve” in the long run.
What is the most difficult part about filing taxes for you? Share with us in the comments below.