3 Tips to Increase Your 2017 Tax Refund
By: Hugh Pendleton, President
Did you catch every business deduction on your tax return last year? If you're like most business owners, the unfortunate answer is probably no. Tax deductions can save your business thousands of dollars every year, but they are the details most commonly overlooked or missed by small and medium business owners. This is due to a few factors, but the two biggest causes are confusing deduction rules and . . . confusing deduction rules.
In my experience with clients, the biggest headaches are caused by the rules for "Travel and Entertainment" (T&E). From tracking receipts to correctly itemizing trip expenses, it can be pretty overwhelming. Here are some tips to help your business get ahead of this year's tax return and make claiming every T&E deduction a snap.
Know what's deductible
In general, business travel expenses (transportation, accommodation) are 100% deductible. Meals and entertainment such as travel meals, client dinners, team outings, and working lunches are 50% deductible.
Commuting to and from the office isn't deductible, but if you use your car for a business-related task during the workday, like visiting a client or picking up supplies, the mileage can be deducted. Mileage deductions also apply when using your own vehicle for a business trip.
Keep a journal
Do you remember the details of every client and partner lunch from last month? If you do, please teach us your ways. For everyone else, keep a journal of your T&E-related business meetings to help you track and remember them. It's also an IRS requirement if you want to claim any T&E deductions on your tax return (sorry, memory wizards). These journal entries will also help minimize the stress of an audit, because you won't have to struggle to match your expenses and receipts to the corresponding meeting details (who, what, and business purpose).
Track receipts—there's an app for that
Right now, I bet you have at least five receipts in your wallet and many others spread across your car, home, and office. There's an easier way to track and reconcile your T&E expenses—use a mobile app. Instead of spending your time manually entering receipt data, use an expense app (I love Receipt Bank) to snap a photo and record every transaction digitally. And bonus—no more stressing about lost receipts or the dreaded monthly admin day.
These three actions can save you a ton of money come tax season. What could your business do with a few extra thousand dollars this year?
At Digit Keeper, we want to help entrepreneurs peel back the curtains and better understand bookkeeping rules, no matter their level of knowledge. No one should feel intimidated by tax code which is why we're sharing our expertise.