Tax time for some of you may the most frustrating
time of year. If your a small business owner, you probably
find preparing tax returns a monumental task. Perhaps the best
advice I could give to anyone who detests tax preparations is to
seek an expert early in the year and let them prepare the
There are two good reasons
for using a tax expert. First, it gives you more time to run your
business. and second, good advice can save you money
during the year. Some tips to make sure next year is hassle-free: have a meeting
early in the year with your accountant. Your accountant should
advise you on the latest tax laws and how they relate to your
business. This ensures you will make the right decisions before
a tax crisis occurs. Keep good records during the year. Most
accounts send their "clients" an organizer
booklet that explains what records and information
is needed at year-end. Using the "organizer"
eliminates last minute frustrations. Nothing dismays
an accountant more than to have a client show
up with a shoe box full of checks and
bills. If you have any questions during the year, ask
them. A small fee to answer a question in July is better than a
large fee to reconstruct data the following April. Take
full advantage of your accountant's expertise throughout
the year and save money.
Barry L. Carr is President, CEO of TeleVideo Multi-Media Inc.
"The best advice I could give
to anyone who detests tax preparations is to seek an expert
early in the year"
RETAINING RECORDS Most
records have to be held for only three years after the due date of
your tax return. That's when the statue of limitations expires for tax
audits by the IRS and refund claims by the taxpayer. But some records
should be kept indefinitely especially those relating to the acquisition of
property whether by purchase, gift, or inheritance. The reason for this is
that if you ever sell the property you can't figure profit or loss on the
sale without proof of its original cost or other tax basis.
ways to qualify for a home office deduction By Joseph Anthony
Deducting the cost of an office in your
home is one of the most common tax-saving options available to entrepreneurs. It's also
one of the most misunderstood. It's relatively easy to qualify for this deduction. Here
are five conditions that will help determine if you are eligible:
You use the space at home regularly and solely for administrative or
You don't have another fixed location where you tend to those
administrative or management tasks.
The home office is your principal place of business, and you use the
office space regularly and exclusively for business.
The home office is not your principal place of business, but you use
it to meet regularly with clients.
The home office is not your principal place of business, but it is in
a structure separate from your home that you use regularly and exclusively for your
Turn Non-Deductible Commuting Mileage Into A Legitimate Business Expense By Wayne M. Davies
For most folks, commuting mileage is a non-deductible expense --
unless you know the little tax trick I'm about to reveal.
The non-deductibility of commuter miles is painfully true for the employee who fights rush
hour traffic every day, twice a day, for 5 to 10 hours a week.
All that hassle, and what does he have to show for it? Just gas money
down the drain, not to mention the wear and tear on both his vehicle and his
You can deduct virtually all your mileage, including the miles you log from your home to
the office or other place of business, if you meet the following two criteria:
1. You are a small business owner or self-employed person, and
2. You have two offices or work locations: one outside the home (Office #1) and one inside
the home (Office #2).
Having two offices is very common for today's self-employed professional. The store owner,
the shopkeeper, the salesman, the plumber, the consultant -- all these folks are typically
self-employed and have two offices: one where they meet with the public (Office #1), the
other at home, where they get their paperwork done (Office #2).
Here's how it works:
Every day you get up and "go to work." But you don't get in the car and drive to
Office #1 right away. If you did that, even as a self-employed person, you would be
racking up non-deductible commuting miles, just like the employee.
Instead, you grab a cup of coffee and head to Office #2 first, which takes all of 30
After working in Office #2 for awhile, then you hop in the car and head to Office #1,
where you work for the bulk of the day.
Then, when you're done at Office #1, you get back in the car and go "home" --
except when you get inside your house, you don't head for the living room, you go straight
to Office #2, where you finish up your daily routine with a few final minutes of
What have you just done?
You daily round-trip "commute" is now a business deduction, due to a simple tax
loophole that says:
Any miles driven between two business locations are deductible business miles.
The fact that one of those two locations just happens to be your Home Office is fine and
dandy with the IRS.
By following this route each day, you can save hundreds, even thousands of dollars in
The proof is in the pudding:
Your round-trip "commute" is 20 miles per day.
20 miles X 5 days = 100 miles per week.
100 miles per week X 50 weeks = 5,000 miles per year.
5,000 business miles X .36 cents = $1,800 deduction
So, you just got yourself a nice $1,800 deduction -- a deduction that you've probably been
entitled to for years but didn't know it.
$1,800 deduction X 32% income tax rate = $576 in actual tax savings (27% federal income
tax + 5% state income tax)
Five-hundred and seventy-six bucks. . . every year. . .
. . . Hmm, mmm, good! Now that's a tasty little morsel!
The Right to an "Installment" Agreement
If you do end up owing the IRS money, things can get ugly and fast. Their notices
make it clear they want the money now -- all of it. What they don't make clear is your
right to an installment agreement.
To negotiate a reasonable payment, get a copy of IRS Form 433-A, the Financial Statement.
This lists your income, expenses, assets and liabilities, and will accurately present how
much you're able to handle paying.
Unfortunately, the IRS now charges a $43 user fee on installment plans. But, paying $43 is
better than having to come up with big money you don't have right now.
tax information contained at this site can benefit you but is not intended to replace the
advice of your accountant.