5 Things Your Business Needs For Tax Deduction To Stick

Every business must file and pay taxes, but understanding how to properly report financial information can help lessen the burden. By taking advantage of business tax write-offs, expenses incurred in the course of running a company can be deducted from income, which ultimately lowers your tax liability. Careful tax planning and consistent recordkeeping will result in the proper calculation and reporting of business tax write-offs.

What Is A Tax Deduction? A tax deduction (or “tax write-off”) is an expense that you can deduct from your taxable income. You take the amount of the expense and subtract that from your taxable income. Essentially, tax write-offs allow you to pay a smaller tax bill. But the expense has to fit the IRS criteria of a tax deduction.

Do You Want To Take Deductions And Write-offs On Your Taxes?

You will need these 5 things for that deduction to stick. The first 3 items are commonly found on the receipt.

1. Place

Your receipt must show the name of the place and the location where you purchased the item or service.

2. Point In Time (Date)

Your receipt must include the date when the purchase took place.

3. Purchase Amount

Your receipt must show the purchase amount of the item or service purchased. It is always best to have an itemized receipt showing the breakdown cost of each individual item, tax amount, discounts, and total amount. This is especially important when claiming restaurant/food tax write-offs. Be sure to include any tip amounts on the receipt as well.

4. Person

Your receipt needs to include notations of the person you were with. This applies to things involving trips, entertainment, and food write-offs. Include the names of your employees or clients that you paid for.

5. Purpose

Your receipt must also include the purpose of the item or service provided. This again especially is important when treating clients or employees to meals, entertainment, travel, etc. This would also apply to services such as building repairs, marketing services, etc. The more you document the better.

Key Takeaways

• Document as much as possible for every receipt about the things we talked about.
• Be sure to scan a copy of each receipt immediately and store it digitally. Receipts can fade.
• If you are not sure if the item or service your purchased is tax deductible, ask your bookkeeper, account or CPA.
• Don’t wait till the end of the year to process your receipts.

Have You Considered Hiring A Bookkeeper?

A professional bookkeeper does not need to be a full-time employee. These services are often best outsourced to firms who have strategies in place to help small to medium-sized businesses excel at what they do best, providing services and solutions to their clients. Bookkeepers are perfect workers to work remotely.

Stash Bookkeeping has a knack for designing or re-designing bookkeeping systems that help owners take their business to greater levels. Using common sense as our greatest weapon, we love to find new ways to take the work out of paperwork.

Stash Bookkeeping has been established for nine-plus years, managing small to medium-sized businesses’ books ranging from $1,000,000 to $20,000,000 in annual revenue, and serving 100’s happy clients in a variety of industries nationwide. With extensive experience in building/maintaining a solid set of books, we are able to produce an accurate set of financial statements every month.