Why You Should Scan Your Business Expense Receipts

February 20, 2012, Filed under: Tips — Evlyn @ 4:09 pm

 

All business owners should buy a receipt scanner and scan your business expense receipts.

 

WHY?  Picture this scenario ~ you are in an IRS audit and the auditor asks to see your business expense receipts. As you pull out your business expense receipts, you discover that the ink on all them has faded and the pages are blank!  The auditor is not amused.  Is your situation hopeless?

 

Not if you had scanned your business expense receipts into a scanner and can display your records on a computer or print them out.

 

A receipt scanner is a scanner designed specifically for scanning and cataloging receipts. Not only will you have an image copy of all your receipts but the scanner software will extract the pertinent information. This data can then be used to create business expense reports or exported to other financial software.

 

Receipt scanners are a smart investment and a huge time saver for the home business owner or anyone else who has to track expenses. Here are some customer reviews regarding receipt scanners:  http://receiptscanner.net/.  Before making an investment, do your research for the receipt scanner that will be best for you.

 

Don’t forget to save a backup of your scanned receipts on a flash drive and store your flash drive in a safe place

 

For more information about business expense receipts  or receipt scanners go to our Facebook page and message us, or send an email request to carlilesos@yahoo.com.

Asset or Expense?

February 13, 2012, Filed under: Taxes — Evlyn @ 11:54 am

 

Asset or Expense?  This is a major question to plagues business owners.

 

What is an Asset

An asset is any major purchase that will last in your business for more than one year.  Some examples of assets are:  equipment, furniture, building and land, and vehicles. 

When purchasing an asset, you will need to record:

  • Date purchased
  • Description to identify the asset type and be able to tell it apart from other assets when disposed of.
  • Cost of the asset including delivery, setup, and other fees necessary for usability

Paper work on assets should be kept available from year to year until disposed of.  Once disposed, which also needs to be reported, the paper work is filed away with the tax return.

 

Types of Depreciation

There are different types of depreciation which will need decisions based on other tax planning.  You can depreciate some assets in full the first year.  Base this decision on tax need along with future plans for the asset.  If you buy a piece of equipment with intention of replacing it or selling it off prior to the 5-year life value determined by the IRS, you may not want to depreciate it in full.  This should be a conversation you have with your tax preparer for each asset purchased during the year.

 

For more information about what is an asset or types of depreciation, go to our Facebook page and message us, or send an email request to carlilesos@yahoo.com

Keeping Track of Allowable Business Expenses and Income

February 8, 2012, Filed under: Taxes — Evlyn @ 11:32 am

 

Here are a few tips to keep track of your allowable business expenses and income.  By following these tips you may keep your tax preparer happy and possibly cut your tax preparation bill by a few dollars.

 

During the year you accumulate bills and collect monies for your business.  At tax time you need to give this information to your tax preparer.

Total all your income from sales.

  • This should be more than the 1099’s you receive in the mail if you’re a service business.

Total your allowable business expenses from doing business.

  • Your tax preparer wants totals for each line on the tax return.  As a sole proprietor your business is reported on schedule C.

 

Allowable business expenses include:

Advertising, contract labor and payroll, insurance, interest, legal and professional fees, office supplies, rent, other supplies, bank service charges and credit card deposit fees, repairs and maintenance, taxes and licenses, travel and meals, other.

 

To request a complete listing with explanations of types of allowable business expenses in each category go to our Facebook page and message us, or send an email request to carlilesos@yahoo.com

Does Your Home Office Meet IRS Standards?

February 7, 2012, Filed under: Taxes — Evlyn @ 11:57 am

 

Does your home office meet the IRS home office deduction standards?

Meet these three tests and gain valuable deductions for your home based business:

  1. Exclusive use – a separate and identifiable space in your home that is only used for business purpose and no personal activities ever take place in that space.
  2. Regular use – Use it on regular basis to perform administrative or management activities, use it as a place to meet or deal with clients in the normal course of business.
  3. Principal place of business – no other fixed location is available to conduct administrative or management activities

At tax time if you qualify for the home office deduction you will need the following information:

  • The total space of your home and the total space used for business purposes exclusively.
  • You will need to determine which expenses are direct versus indirectly related to your business.  Expenses that can deduct:
    • Mortgage and property tax or your rent
    • Utilities that are imperative to your business operation
    • Insurance and general repairs (not repairs that affect only non-business use of home areas, such as painting the kitchen or lawn care.

 

Do you have questions about home office tax deductions?  Evlyn Carlile from Simple Office Solutions can help. Contact her via email at carlilesos@yahoo.com.

 

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How to Organize Your Bookkeeping Records

January 31, 2012, Filed under: Bookkeeping — Evlyn @ 11:09 am

 

Paperwork…if we don’t have an efficient system for organizing paperwork, it will overcome us!  Although bookkeeping may not be your favorite task, it is a necessary aspect of business.  Take control of the never-ending paperwork by using a system that keeps you organized and tax ready.

 

When starting a bookkeeping system, use categories for totaling and filing your paperwork.  Look at your tax return and use the categories from the schedule C as file and bookkeeping titles.  It’s the perfect place to start!

 

For example, you may want to have files and bookkeeping titles for the following categories:

Income

  • Merchant card and third party payments
  • Gross receipts or sales

 Expenses

  • Advertising
  • Car and truck expenses
  • Commissions and fees.
  • Contract labor
  • Employee benefit programs
  • Insurance (other than health)
  • Interest:
  • Mortgage (paid to banks, etc.)
  • Legal and professional services
  • Office expense
  • Other expenses
  • Pension and Profit-Sharing Plans
  • Rent or lease (vehicles, machinery, and equipment, other business property)
  • Repairs and maintenance
  • Supplies
  • Taxes and licenses
  • Travel, meals, and entertainment
  • Utilities

This category system allows you to easily enter and retrieve information.  You’ll find information quickly by using the same titles on your bookkeeping records as you do on your filing system.

 

Do you have bookkeeping questions?  Evlyn Carlile from Simple Office Solutions can help.  Contact her via email at carlilesos@yahoo.com.

 

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Mileage – Is it Business or Commute Miles?

January 30, 2012, Filed under: Bookkeeping — Evlyn @ 9:31 am

 

Mileage for 2012 is 55.5 cents for each business mile.  Do you know the difference between business and commute miles?   If you are confused, you’re not alone!

 

First, do you have a home office?  If “yes” then any time you leave the house for business reasons, the miles are deductible.  If the answer is “no” – your first stop whether the office or client is commute miles, the remainder are business miles until your last stop home which are commute miles again.

 

You will need three numbers for tax purposes:

  1. Total miles driven during the year.  At the beginning and end of the year write down the odometer reading.  At the end of the year subtract the difference.  This will give you the total miles driven.
  2. Commute miles driven during the year.  This includes miles to and from a regular W2 job, as well as miles from home to the first stop and for the last stop to home if no home office.
  3. Business miles driven during the year.  Make sure you keep a daily log of some sort – a small weekly calendar where you can record the business stops along with the miles driven.   In this log you will need to record: the date, destination, purpose for trip and business miles driven.

If the primary reason for the trip is business, but along the way you stop at the post office, gas station, and grocery store you do not need to record these stops.  All the miles for this business trip are deductible. However, if the personal stop is out of the way stop, then your business miles stop with the last business stop.

 

*Your other option is actual expenses – you not only need to keep the above log for business mileage but also all receipts for gas, repairs, etc,  Total expenses will be deducted at the % rate of business over total miles.  It usually works out better to take the 55.5 cents per mile.

 

Do you have questions regarding mileage?  Evlyn Carlile from Simple Office Solutions can help.  Contact her via email at carlilesos@yahoo.com.

 

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1099, 1096 and W-9 Forms

January 24, 2012, Filed under: Bookkeeping — Evlyn @ 10:00 am

 

Have you hired a sole proprietor to provide a service for your company? 

Did you pay them $600 or more during 2011? 

 

If you have answered “yes” to these two questions, you need to send a 1099 to them by January 31, 2012 as well as send a copy to the government agencies by the end of February.  You need to obtain a completed W-9 form from the sole proprietor and keep it on file.

 

To stay in compliance with federal law, I suggest that for each service person or company your company does business with:

  • Go to www.irs.gov for a PDF copy of the W-9 form.
  • Keep a copy of the completed W-9 form on file.
  • Mail out the W-9 form with new contact or the first time you pay any service provider. Ask them to complete the form and return back to you.
  • They will need to complete the following sections:  Name, business name, business classification, address, taxpayer identification number (TIN), signature, and date.

 

1099 forms are available at office supply stores.  By January 31, 2012 you will need to complete and mail a 1099 form to the service provider who you have paid $600 or more in 2011.  You will also need to mail copies of all the 1099 along with a 1096 cover form to the IRS and the WI Department of Revenue by the end of February, 2012.

 

*Penalties for not filing or late filing increase with time, ranging from $15 to $50 per form not filed or incorrectly filed.  If you file an incorrect 1099 form, but correct it by August 1st the IRS will usually forgive the penalty. On the other hand, if the IRS can show “intentional disregard” of the filing requirements or the accuracy of the information, the minimum penalty is $100 per 1099 form.

 

Do you have bookkeeping questions?  Evlyn Carlile can help.  Contact her via email at carlilesos@yahoo.com.

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Five Easy to Follow Bookkeeping Tips

November 21, 2011, Filed under: Bookkeeping — Evlyn @ 10:09 pm

Tip #1

Do you have a hobby or business?  Do you expect to make money from your efforts?  If the answer is “YES,” you will need to establish yourself as a business!  Make sure you:

  • Keep business and personal expenses separate
  • Open a separate checking account for your business
  • Draw money out of your business checking account to deposit into your personal account

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