Avoiding Small Business Write Off Audit Trouble

An improperly done small business write off can lead to audit troubles so it is very important you write off your deductibles properly. Avoiding small business write off audit troubles can be a tricky business and you need to pay close attention to details to stay out of trouble. To help you avoid tax audit troubles, here are some useful tips.

Write off Your Travel Expenses Properly

A lot of small business owners get into trouble with the IRS for improperly deducting business travel expenses. Note that not all travel expenses can be written off as business expenses so make sure that you get this one right. If you are traveling with a family member or a friend who is not your employee or professional involved in your business, do not include their travel expenses in your deductibles, even if you paid for their fare, lodging, meals and entertainment. Remember that that under the IRS rules, only the travel expenses of people who are professionally involved in the business and are reasonably needed to make your business trip successful can be included in your deductibles. Also, see to it that you only deduct 50 percent of the food and entertainment costs you incurred during your business trip.

Mind Your Phone Bills

A lot of people mix business with personal affairs, so the IRS is always wary when it comes to cell phone bills. In fact, this item is always a subject of scrutiny by the IRS so make sure that you do not use your business phone for personal calls. If you use your business phone for personal calls, you should get an itemized cell phone billing and deduct the amount of personal calls you made on your phone from the bill. This way, the IRS will not go after you for making too many personal calls on your business phone. When it comes to your landline phone, make sure that you get a phone dedicated to your business, especially if you work at home. Note that if you only have one phone at home, the IRS will not allow you to claim the cost of maintaining that phone as business tax deductible so make sure that you get another line dedicated to your business.

Be Careful with Your Home Office Deductions

Since many people now telecommute to work or have an office inside their homes, the IRS is now very wary when it comes to home office deductions. A lot of people who abused home office deductions have been subjected to tax audit and most of these people have either paid stiff fines or served time in jail so you should be very careful when it comes to this type of tax deduction. To avoid problems, you should ask a professional to measure the amount of space you use as home office and then provide you with a certificate or even just a formal letter stating the amount of space you use for your business. This way, the IRS will be less suspicious that you are shortchanging them.

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