tax deductions Archives - Number Nerd Bookkeeping Solutions

December 5, 2017

How & When to Give as a Business

This is the time of year when businesses start to give back–either through charitable donations or with gifts to their teams and clients.

Giving is a great way to reduce your tax burden, make a difference in someone else’s life and to say thank you to the people who have worked with you or for you throughout the year. There are so many ways and reasons that giving is a “win” for you as a business owner.

But there are also things to watch out for and consider before hitting the online shops with your credit card. Not all giving is made equal, and not every gift is a tax deduction.

I don’t think giving should be from the perspective of looking for a tax break, but rather something you can (and should) do throughout the year. It’s something you do because you’re called to do it or because you’re thinking about someone–not something you have to do, and at a certain price point.

So before you decide to grab gifts for anyone and everyone, or give away thousands because it might make you look good, have a good reason to give. And put some limits in place.

Make it part of your company culture

Many companies out there give as part of their culture. They donate their time, money and resources to organizations, bringing their employees along for the ride. This helps to strengthen teams company-wide while also getting employees more engaged in the business and community. Not only that, but people who give back have a deeper sense of fulfillment, making them happier employees (and therefore more productive).

Make giving part of your company culture, not something you just do once a year. Click To Tweet

Be conscious of how much you’re spending

Of course you’re not going over your budget when donating and gifting, right? It’s easy to let down your hair and spend a bit too much during the holiday season, but it’s important to plan in advance what you’ll spend for each person. Know what your overall budget is for clients and team members and then plan out gifting accordingly. A word of warning: The price of gifts should be comparable to either company standing or years of service. And know that team members will likely compare notes, especially if they all work under one roof.

Know tax limits before buying client gifts

As I mentioned, talking to your tax preparer should be your top priority if you’re planning to use your client gifts as tax deductions. The IRS only allows you to allocate a certain amount per client, and your CPA should be asking you about this. Don’t let tax breaks (or the lack thereof) stop you from giving though. One of the best things about giving is not expecting anything in return.

One of the best things about giving is not expecting something in return. Click To Tweet

As a business owner or decision-maker, it’s your personal preference that will make all the difference when choosing how and when to give back–to your team, your clients and your community. Be sure you’re doing it from the right mindset. It’s not about getting credit for helping, it’s about doing the right thing for the right people.

January 5, 2017

What Tracking Mileage Can Do for Your Business

Whether you work in a home office or are out and about all day long, chances are that you’ll need to get in the car and drive for your business at some point this year. Networking events, business-related errands, lunch with clients, working in clients’ offices, etc. are all things that get me out of my home office on a regular basis.

And because mileage is a deductible expense, I rely heavily on MileIQ, my go-to mileage tracker for both personal and business.

Tracking your mileage is a no-brainer for reducing your overall tax liability for the year. It will save you money and give you a clearer picture of the amount of time you spend driving to client offices and for other business-related tasks. And this can help you analyze your pricing structure so you’re getting more out of that client time.

To deduct your mileage as a business expense, you need to track every mile in your car—both personal and business-related. Back in the day, I used to keep a notebook (like this one) in my glove box and I’d write down every mile I drove. At the end of each month and then again at the end of the year, I’d add up the business miles so I could report them. It was time-consuming and a huge pain!

Luckily, we live in the world of automation and apps today, making it much easier to track those miles. There’s really no reason not to with the number of apps available to us.

We live in a world of automation, making it a no-brainer to track miles for a biz deduction. Click To Tweet

MileIQ automatically captures mileage every time I drive and classifies it to personal or business by swiping left or right. It’s also customizable so I can add vehicles, set work hours and get notifications. Plus, everything is stored on the cloud so it doesn’t bog down my phone with data.

Of course, there are rules when it comes to tax deductions (thank you, IRS) so it pays to educate yourself before you label something as a business or personal expense. For example, while you can deduct mileage for driving to and from a client’s office, you cannot deduct commuting miles if you have an office outside your home.

You can deduct some of your personal miles too, for things like doctor’s visits and cross-country moves. Be sure to talk to your accountant about those!

Of course, there are a number of mileage tracker apps out there, but MileIQ is my go-to. I’ve tried a number of them, and it’s by far my favorite!

December 15, 2016

Do I Need a CPA for Taxes?

You’re looking to save some cash so you do your own taxes. Only to find yourself buried in a mountain of paperwork that you don’t understand. Or confused about what you can and can’t deduct from your taxes.

Taxes aren’t for the faint of heart, especially when you own your own business. In fact, preparing your taxes correctly can make or break your business. And I don’t mean that lightly.

Save Time

Sure, it’s a hassle to make time to get your receipts and bank statements together for your accountant, especially if you didn’t set yourself up for success at the beginning of the year by using a computerized accounting system like QuickBooks Online. But when you’re busy researching the various tax deductions you may or may not be able to use, you could be working with clients. Making money.

Accountants are required to take continuing education hours every year to keep their licenses. That means they are required to keep current on the tax laws, know if any new paperwork needs to be submitted and can sift through your paperwork for you. It’s a win-win in my book. A win for my clients and a win for me!

Save Money

Sure, you know you can deduct your internet services and your mileage. But did you know you can deduct a portion of your rent or mortgage, if you have a home office? There are so many deductions you can take as a business owner that you’re leaving money on the table if you’re not using an accountant for your taxes. And, no, TurboTax will not identify all your deductions. It doesn’t know all the nuances of your business and can’t ask you the right questions.

Save Stress

The IRS is no joke. They can garnish your bank account and take your assets if you can’t pay your tax bill. And while it doesn’t happen often, do you really want to risk it? If you make an error and fail to pay your taxes, the IRS can come back at you for all the back payments—plus penalty and interest.

Not only that, but finding the time to do your taxes right, yourself, is stressful. You have a business to run and a family to take care of. Where are you going to find the time? Save the stress and let someone who knows what they’re doing take the reins for you.

So do you need a CPA to do your taxes? Absolutely. Even as a bookkeeper, I hire a CPA to do my taxes every year. I don’t want to leave anything to chance.

But how do you find a CPA who you can trust? I recommend you searching the American Institute of CPAs directory. They’ve vetted out the accountants on their list and can attest to the professionalism and qualifications of their members. I also have a blog that can help you find the right CPA for you. Not only do you need to trust your accountant, but you need to find someone whose personality fits you and your needs.

December 1, 2016

Get Your Books in Order for Year-End

If you want your accountant to speak to you after April 15, it’s time to start getting your tax documents in order. As a business owner, you need to have organized financials—both for yourself and your accountant.

Dig out that shoebox of receipts and get it together. It feels like an overwhelming task, to be sure, but it doesn’t have to be. Set aside a few hours each day next week and work through one task. By the end of the week, you’ll be ready for year-end and your accountant

Sunday: Go to your local office supply store and buy a pack of at least 12 manila folders. (Bonus points if you buy 24: 12 for 2016 and 12 for 2017.) Label each of them January through December.
Monday: Dig out that shoebox of receipts and file them by month. Be sure to find the receipts that are sure to be hiding in your email inbox too. Print these and file them in the appropriate folder.
Tuesday: Log into your bank account and print your business bank statement(s) for each month this year. If your statement end date is mid-month, use the start month for filing.
Wednesday: Sift through your files and earmark any large purchases for the year. Write those large purchases on the outside of the folder for that month so your accountant sees it right away.
Thursday: Find last-minute expenses, like charitable contributions or taxes paid out from the prior year. Make note of these on the outside of the folder and include documentation in the monthly folders.
Friday: If the same accountant is doing your personal taxes (which I recommend), sort through your personal receipts and paper clip them together by month. Then add these to your folders, with a sticky note labeling them as personal. Add up all the expenses for each month, then total them for the year for your accountant (your CPA will charge you to add it all up for you!).
Saturday: Party like it’s 2017—because you’re ready for tax season!

Next year, be ahead of the game and save the headache of sorting through a year of receipts. Hire a bookkeeper or have your books set up for success, starting on January 1. Later this month, I’ll let you know how to do exactly that.

November 3, 2016

Shopping for the Holidays: A Gift Guide

With Thanksgiving literally around the corner, your mind might be on holiday gift-giving. But before you set your alarm for the crack of pre-dawn and head out for Black Friday deals, sit back and take a look at some of the great gift ideas you can grab up online. These are some of my favorite online retailers (and some new ones that I plan to try out this year). Because, as a small business owner, I know the importance of supporting some of our own!

Ashley Brooke Designs by Ashley Brooke – I love this shop. So much, that I shop here often. For myself, for those on my gift list. You name it. She has adorable notebooks and classy note cards.
Bumblewood by Meg Hollar – This all-natural skincare line is a great way to pamper everyone on your list. From lotions and butters to lip care that fits neatly into stockings, you’ll find great-smelling products that actually work. And gift boxes are perfect for clients and out-of-town loved ones.
dapper & darling by Kailey Santos – The Silhouette Shop is amazing and my go-to for Christmas Ornaments this year. You can also get personalized watercolor silhouettes, a modern alternative to the old black-and-white cardboard cutouts from the 80s.
Eikoh Design Studio by Jaime Gill – If you have a wine connoisseur or someone who’s just impossible to shop for on your list, consider this new find of mine. Custom and pre-printed glassware gift sets and picture frames are reasonably priced with a quick turn-around.
Grace Vincent Gifts by Sally Schwieterman – With a goal to “make your gifting experience as stress-free as possible,” you know you’re going to find what you want here. Grace Vincent offers gifts specifically for men, too—which isn’t common in handmade products. Aside from beautiful pre-made gift baskets, Grace Vincent’s designers will customize a gift box for you!
TomKat Studios by Kim Stoegbauer – Throwing a party? This is the place to go! TomKat has been featured by Martha Stewart, Shutterfly, Pottery Barn Kids and more and primarily focuses on super-cute party décor. But it also features a number of gift items, like planners, stationery, home décor and (my personal favorite) a monthly T-shirt club.
ShePlans by Ashley Staum – Who doesn’t love an awesome planner!? I’ve become a planner junkie, complete with stickers and all. Ashley’s planners are one of my favorites. But if you like what you see, don’t wait around! These sell out every year!

No matter where you shop for your holiday gifts, remember to budget for it (and stick within your budget). You don’t want to start the new year with a nagging credit card bill because you didn’t plan ahead for the holidays.