By A.J. Gross, C.P.A., E.A.
Operating a small business can be tough. There is plenty of work to complete.
Generally, one aspect of the business that is easily mismanaged is taxes and accounting. Many small business owners gather documents at the end of the year for taxes. Gathering documents at the end of the year can be time consuming and inefficient. The following are IRS resources to help you categorize expenses and identify business expenses throughout the year.
(Forms and Publications can be downloaded online at www.IRS.gov or our website
www.ALGTaxSolutions.com in the Resources section).
1) Form 1040 Schedule C - Schedule C will help you categorize and identify expenses.
I recommend you create a folder for each expense type. When there is a business expense, you file a copy of the expense in the proper folder. Commit one to two hours a month categorizing your expenses. At the end of the year, you can simply add up all the business expenses for each category.
You may have other expense types not listed on Schedule C such as telephone or postage. You can create custom expense types but I recommend creating no more than 10 custom expense types.
2) IRS Publication 535, Business Expenses – What is and what is not a business write-off? If you are asking yourself this question, then read IRS Publication 535. The IRS summarizes the main business expenses.
3) IRS Publication 463, Travel, Entertainment, Gift, and Car Expenses – This publication details the
requirements for writing off meals and entertainment. If you drive a lot, then read this publication for deducting auto expenses.
4) IRS Publication 587,
Business Use of Your Home
– If you maintain an office in your home, review Publication 587. This publication details what home costs can be written off by your business.
Utilize these tools to make your life easier. Do not wait until the end of the year to compile your business documentation. Spending an hour or two a month on categorizing your expenses will make
your life much easier.
IRS Circular 230 Disclosure:
To the extent this writing contains advice on a federal tax issue, the advice is not intended to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue
Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed in this communication.
A.J. Gross, C.P.A., E.A. is President of ALG Tax Solutions. A.J. Gross can be contacted at
AJGross@algtaxsolutions.com or www.ALGTaxSolutions.com.
This was printed in the December 1, 2013 – December 13, 2013 Edition
