What Tax Records Should You Keep?

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There are few words that can universally make people cringe – among them is the word “taxes.” The brilliant Benjamin Franklin once said “In this world, nothing can be said to be certain, except taxes and death.” While we know we can’t avoid taxes – we do know that we can streamline the record-keeping end of things.

It is important to know what records you need to keep for long-term purposes. This allows you to streamline the process a bit and make your paper trail less burdensome. We have used the IRS’ website to compose a basic list of items that you should keep:

Gross Receipts – these prove business income. These include:

  • Cash register tapes
  • Bank deposit slips
  • Receipt books
  • Invoices
  • Credit card charge slips
  • 1099-Misc forms

Purchases – these include items that you buy and sell to customers. If you sell finished products or are a manufacturer you should include all receipts for materials and parts. These include:

  • Canceled checks
  • Cash register tape receipts
  • Credit card sales slips
  • Invoices

Expenses – these are costs that you incur to execute your business operations.

  • All receipts both digital and physical
  • Credit card invoices

Assets – this is a BIG one! These are the property of your business and include both physical and intellectual items. You must keep records for each individual asset that include the following information:

  • Acquisition of assets (when/how)
  • Purchase price
  • Improvements – cost and value
  • Section 179 deductions
  • Depreciation calculation and deductions
  • Casualty and loss deductions
  • How you used the asset
  • Selling price and how it was disposed
  • Expenses of sale

Employment Taxes: Keep ALL tax documents for employees for a minimum of 4 years.

This list is pretty exhaustive and it still doesn’t even cover absolutely everything. As a business owner it may seem overwhelming, which is where we can help. Contact us today to help manage your tax filings – let us do the hard work for you!

Business Tax Credits for Electric Vehicles

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Are you in the market for a new vehicle or perhaps a fleet of vehicles for your business? Have you considered going electric? Most people think that the only major financial benefit to electric vehicles is the gas savings – truth be told, that is just the tip of the iceberg.

In addition to saving up to 75% in fuel costs there are major savings in maintenance and mechanics. Because these vehicles do not have a transmission or combustion engine you will be able to omit oil changes, fuel filters, emissions testing and other costly upkeep. In addition to being low maintenance, the drive train and braking system design is simpler, resulting in greater reliability which will render fewer repairs. And last but not least, electric vehicles also offer tax credits!

According to the IRS.gov website, “For vehicles acquired after December 31, 2009, the credit is equal to $2,500 plus, for a vehicle which draws propulsion energy from a battery with at least 5 kilowatt hours of capacity, $417, plus an additional $417 for each kilowatt hour of battery capacity in excess of 5 kilowatt hours. The total amount of the credit allowed for a vehicle is limited to $7,500.”

Electric vehicle pricing is comparable to that of mid-range cars on the market. What does that mean? That means that simply by purchasing a single electric vehicle, you immediately save up to $7500 on your taxes. You are, at the end of the day, saving money on a purchase you would have made regardless.

Have you recently purchased an electric vehicle used for business purposes? Are you planning on purchasing one? Calculating the tax breaks can be challenging – we recommend reaching out to someone who has experience. Employer Solutions Plus is partnered with those who are well versed in tax filings and can help you maximize your deductions like this one.

Contact us today for a consultation!

 

What Business Expenses Can Be Deducted?

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Did I save my receipts? Can I deduct this? Will this be flagged? What if I get audited??

Do these questions sound familiar? They sure do to us! As business owners ourselves we completely understand the stress, the confusion and the pressure that tax season brings.

Using the guidance at IRS.gov, we have put together a basic guide for you to understand what you can and cannot deduct. Hopefully this helps reduce some of your stress as you prepare your tax paperwork for your accountant!

What qualifies as a business expense?

  • A business expense must be “ordinary and necessary.” Well that sure is confusing – what does that mean? If it is required to run your business – i.e. a cell phone, employee pay, insurance, office space – it counts.

What does not qualify as a business expense?

  • According to the IRS website, “The expenses used to figure out the cost of goods sold, capital expenses and personal expenses” do not count as business expenses. In general, you can’t deduct personal expenses. However, if you use something for both business and personal, you can divide the usage and deduct a percentage of the cost.

What if I use my home office or car for business purposes?

  • Here’s where it gets tricky, if you work out of your home you may be able to deduct things like mortgage interest, utilities, etc. For more specific information, review the Home Office Deduction guidelines provided at the IRS website. Car deductions are a bit more complex – you can find out mileage rates, and what is included and excluded here.

Hopefully our high level overview gives you a bit of clarity to navigate your way through tax season! Did you know that through our PEO partnerships and small business resources, Employer Solutions Plus can help find your business the perfect tax filing services? Professional help can assist you in streamlining your administrative functions and without having to memorize every single tax law you can focus more time on growing your business!

Contact us today to see how we can help!