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I have never attended any conventions or gathering but I want to start doing that now. Does anyone have any advice on receipts, travel expenses, hotels, etc. I'm looking for insight on how to deal with this and what you do with your own situation. It could be the big picture or you could go in detail.
Thanks !
Save every receipt you get that is directly related to your business trip.
Airfare, hotel, food + drink, taxi fares, any clothing you buy specifically for the shows, etc etc etc
If it is purchased for or, as a result of your business trip the it is able to be written off on this years taxes :)
Regards,
Lee
One thing that's important to note is you can only deduct job expenses/misc itemized deductions that's over 2% of your income if it's something you're going to be doing with your individual income tax returns.
So for easy math purposes, if you made $10,000 a year in income, you could deduct expenses over $200. Or essentially subtract $200 from the total amount of expenses and the # that's left is what you can deduct.
So it definitely helps to keep any and all receipts as you'll be playing catchup initially with that 2%.
Dunno if you don't already have one but just in case... could be a good idea eventually to set up perhaps a sole proprietorship and have these kinds of business and business-related travel expenses go through that.
But I think the overall effect one vs. the other would have on final tax burden would be something only you'd know after consulting with a tax professional.
the best thing you can do is get an accountant with whom you can be totally honest, he is the only person qualified to give you this type of advice and believe me, he will be worth way more to you than you pay him!!!
cheers,
Luke
Thanks for the advice Lee, BD and Chilihost. I will keep every receipt that I get. Since I do have a long tab with Uncle Sam, I have to keep meticulous records. In the past, I hardly took any business deductions. What a fool I was but you live and learn.
You will make your accountant happier if you take a little time to sort your receipts. The system I use is kind of a hybrid. I use Quickbooks but I also keep the paper evidence.
I label file folders "meals" "travel" "software" "office supplies" "rental cars" "hotels" etc.
Try to make small categories--go to an old tax return Schedule of Expenses to get a good idea of headings. Since you are keeping records to prepare a tax return, look at the forms you will use to give you an idea of how to organize your records.
I take my receipts and photocopy them. That way every receipt is a uniform 8 1/2 x 11 size. I can write notes in the white spaces too. If you insist on keeping the original, staple it to the copy. This will keep your records much neater and those small slips are easy to misplace.
I enter everything into Quickbooks but I always have that paper file to go back for proof. If you have an accountant preparing taxes, keeping organized records will be greatly appreciated. I used to prepare tax returns as part of my law practice, and still do for a few select clients, so I remember how much an organized system can ease the process. I did have to tell one client to take his shoebox home and organize it otherwise I would charge him $200 an hour to do it myself.
Meals and entertainment you only get 50% deduction. Clothing that you purchase for your own use is not usually deductible unless it is for a specific purpose and is not suitable for street use [a welder's apron is deductible, a polo shirt that says "Cher Security" is not] but clothing you buy as promotional items to give to clients is deductible.
Fun stuff. I am really dreading my own taxes this year--there will be no refunds coming to this guy.
Chad