The items listed above are not always tax deductible. Talk to your CPA.
Additional items to discuss with your CPA include:
- whether a physical inventory count is required
- special rules regarding salaries paid to business owners
This chart of accounts includes no fixed asset accounts on the balance sheet. This is because it is more useful to record current purchases of equipment in an expense account so that the bottom line tracks the taxable income more closely. If you are a sole proprietor or a one-owner LLC, you will not show a balance sheet on your tax return. Corporations, multi-owner LLCs, and partnerships should receive adjusting journal entries from their CPA to bring the bookkeeping into agreement with the tax return.
Important note: The de minimus safe harbor amount for deducting tangible "units of property" has been raised to $2,500 if that has been the company's policy for the entire year. The policy does not have to be written. A writen election is required with the tax return. For most companies, bonus depreciation and Section 179 deduction makes this unnecessary.
Here is a tip which will save you many headaches: always fill in the description / memo line on your checks. This information will clear up many questions when you look at the disbursement a year or two later. Example: You are looking at a payment you made to Joe Smith two years ago. You can't remember anything about Joe, and you have no paperwork filed under "Joe" or "Smith." A little hint on the memo line, such as "computer repairs" would be a big help. You run a business. You can't keep everything in your head. Be kind to yourself (and your tax accountant!) and write everything down.
I like to print out paper copies of credit card statements. For audit purposes, you need both a bill/invoice and proof of payment.
If you have questions / concerns, or would like to enlist the tax services of an experienced CPA tax accountant, please contact me.