The beginning of February is almost like the first week of school or the new year for me. Taxpayers start receiving their documents and my phone starts ringing with questions about what documents are needed and when can we meet. My shelf will start to fill with work to be completed and staff will begin to have questions about what exactly to do with this information clients have sent in. Anticipation starts to build and I make lists, on paper, in my head, and on the computer to prepare for the inevitable onslaught that will be coming in the next 10 weeks or so.
Some of those rules are set to return in 2025, others are gone for good… or until Congress changes their mind.
For small business owners out there without an accounting program, it can be a painful process to gather all your information. I call this “The Reckoning”. Like most large tasks, it is easier to do if you complete it a little at a time, but let’s be honest, most of us (ok, me, too) are so busy that the thought of sitting down and dealing with paperwork is too much. It is a good idea to schedule administrative office hours to complete this task each month, but it can work on an annual basis, too. I have created a customizable spreadsheet to use for your Schedule C (sole proprietor business reported on your individual tax return). A Schedule C is simply a report of profit and loss for a single member LLC that is treated as a disregarded entity or sole proprietorship.
Click on the image and save a copy for yourself. Simply fill in the cells with needed information, under the category they apply. The cells are labeled as a Schedule C is. Anything that doesn’t fit neatly into one of those categories can be entered as an “other” category. They are set up to total each category to help make completing your return a bit easier. Remember, you should hang on to all your receipts, records, and backup in case the IRS or state comes calling with questions.
Standard categories for Schedule C include advertising, legal and professional fees, continuing education expenses, office expenses, supplies, contract labor, repairs and maintenance of equipment, equipment purchases, travel, and meals and entertainment expenses.
An item to note for 2018: meals and entertainment category has been greatly altered. In 2017, these expenses are deductible at a 50% of the total level, although the category is not a carte blanche. There does have to be a business intent with the activity. In 2018, entertainment expenses for client meetings in no longer deductible at all and meals only for travel purposes or substantial business intent are 50% deductible.
In the next few weeks, I will share some tools and tips regarding business assets and depreciation, rental property income and expenses, home office deduction, how to read brokerage statements, and more.
As the year goes on and the IRS begins to issue more guidance related to the new Tax Reform, I will be sharing that information and how it will affect taxpayers and business owners.
You can also follow me on Twitter for daily tax and business talk, along with the occasional food pic, meme, or military spouse related content.
What is your biggest challenge for filing your taxes, as an individual or business owner?