WISE BOOKKEEPING AND TAX
WISE BOOKKEEPING AND TAX BLOG
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The tax implication of employers’ holiday parties, prizes or gift-giving is one of the most recurring challenges employers face at the year-end at virtually all workplaces. Here is some tax rule every employer should know of if they are working towards appreciating their employees with gifts, prizes, and parties at this holiday season.
The first of all rules is the general tax rule under the Internal Revenue Code Section 61, which states that; “all forms of compensation are subject to income tax unless specifically excluded by the tax code.” Although, this rule is mostly ignored by employers when giving gifts, or prizes at companies’ holiday parties. Some employers do not see gifts, prizes, and parties as a means of compensating their employee for their past labor and their future commitment. While some ignorantly believe that the gross income tax code Section 102 (a) excluded gifts and prizes.
Without proper vehicle substantiation, your vehicle expenses may be treated as a taxable income and you will be forced to pay tax.
It is quite important you get it right and that is why this article will explain substantiation of vehicle expenses.
In the previous article, substantiation of business expenses was explained, and a brief highlight was given on what is needed for a business expense.
Let’s say during the first week of March you left your business environment to a neighboring state to have a look of some of their construction equipment’s you will like to buy and you spent three days.
The last week of March you had to leave for a retreat on and workshop on dealing with the best practice of the business industry.
The time for tax comes in and you want to deduct the expense you incurred when you went on both trips?
That seems right but you can only do that if you have proof that you incurred those debts during the business trip. But, if you are unable to provide documents to back up your claim, the internal revenue service (IRS) is likely to reject your claim.
This is simply because the IRS doesn’t take the word of tax payers unless the taxpayer can verify that the tax deduction is really worth it. Business expenses are large deductions and substantiation of business expenses is quite easy only with evidence.
For you to claim credits on your personal income tax return or certain deductions on your business return, a proof of expense must be provided by you to help.
The ways we do business have been changed by the rise of the online community and one of the places where the difference is significant is accounting. Accounting is much like seeing your optician regularly which no one really wants to spare their time for but neglecting can be detrimental.
This is why most business owners deem it fit to hire accountants to help them keep records of their book.
Here are advantages of hiring an outside accountant to help you take care of your book;
One of the most crucial aspects of every business is bookkeeping, and it is more crème for small businesses. This is because small businesses can fall rapidly because of poor bookkeeping. On the other hand, if you choose to do the right thing, your business is a step closer to being successful.
Booking involves two major tasks which are to Organize and store financial documents such as income tax records, journals, ledgers, financial statement etc. Bookkeeping helps small businesses to keep record of all transactions and events which include but are not limited to earnings, losses, inventory, payment, receipts and purchases.
The importance of bookkeeping for small businesses cannot be overemphasized because it does not only allow the business owner have understanding of the progress the business is making, it also keeps the business owner abreast of areas within the business where profits are made and where costs might be reduced.
The summary of the importance of bookkeeping for small business is that it gives you the current status of your business and helps you analyze your business financially to avoid future problems.
I am sure we are all aware of the major tax reform passed by congress in 2017 and tax code interpretation releases by the IRS to be take effect in 2018.
Changes made to tax code are always unveiled yearly based on the inflation and cost of living changes.
It is very important you read this because the updates and the new rules passed by the congress through the Tax Cuts and Jobs Acts (TCJA) would affect your tax return and on how much you may owe or losing some tax benefits.
Here are tax deduction changes you need to know
Are you ready to answer IRS questions after filing your tax? Are you ready to spend hours in front of your computer using tax software? Are you ready to restart the process of tax filing after you discovered an error in your filed tax?
If your answer to the questions above is NO, then it’s important you read this.
You might also be tempted to carry out the process yourself so as to save little amount. But you might end up losing out more amount of money that you plan saving because of your little knowledge on tax code.
The reasons why you need to hire an experienced tax professional as an individual or for your business cannot be overemphasized because it is a step you can never regret.
Here are reasons why you should hire a tax professional to help you or your business file your tax.