taxes & the pampered chef by mckenzie rogers, c.p.a
TRANSCRIPT
Record RetentionAverage rule = 3 years
If you underreport income by 25% = 6 years
If you don’t file a return or commit fraud = Indefinitely Records related to assets = Keep as long as you own the asset
Business Deductions
Rule of thumb: “ordinary and necessary”
expenses
Ask yourself: Does any amount of this expense
benefit me or my family personally?
Fixed Assets & Depreciation
Tangible items: computers, desks, filing cabinets, machinery, equipment, furniture, computer software These items
are not expensed when purchased. They are capitalized and depreciated over a prescribed time period.
Business Deductions
Telephone- cannot deduct the cost of phone in your home if you only have 1 phone line- must have 2 to deduct 1
Cell Phone & Internet- only business use portion of the expense is deductible
Business DeductionsAdvertisingOffice SuppliesProfessional fees
(accounting, legal, consulting)RepairsTravel- leave town- hotel, plane tickets,
car rentalMileage* Groceries* Meals* Education*
Education & Training
Expenses for self improvement classes, courses ongrowing business, etc… probably not 100%deductible. Indirectly related to P.C. have toevaluate deductibility.
Training expenses directly related to P.C. productsand presentation and those courses offered by
P.C.,etc… probably 100% deductible.
Meals & Entertainment
Business meals and entertainment expenses incurred in the course of business are only 50% deductible
Receipt for meal should include the date, names of people at the meal or event, brief description of business purpose
Groceries
Groceries you buy to tests recipes that you feed
to your family for dinner are NOT deductible
Groceries you buy to prepare food for showsand show off products that are consumed atparties are deductible
Business use of home
• The business part of your home must be usedexclusively and regularly for your business• If you qualify you may be able to deductexpenses including mortgage interest,
insurance,utilities, repairs, depreciation• Deduction is based on sq. footage of office tothat of the house
Business use of your car
If you use your car for business and personal
purposes you must divide your expenses based on actual mileage
2 Choices: Standard mileage or actual costs
Once you choose you must use forever
Actual Expenses
• Depreciation or lease payments• Gas and oil• Tires• Repairs• Tune-ups• Insurance• Registration
Mileage
2008 January – June 50.5 cents per mile
July – December 58.5 cents per mile
2009 55 cents per mile
Hobby Loss Rules
Your business must show a profitfor 3 out of every 5 consecutiveyears to be considered, “engaged in for profit” and there-fore not considered a hobby.
Losses from hobbies are not deductible.
Audit Risks
Direct Sales
Home in Office
Hobby Loss
Chances of being audited if you file Schedule C- about 1%
Sources of Assistance
www.irs.gov IRS Publications: 334 Tax Guide for Small Business463 Travel, Entertainment & Car
Expenses, 535 Business Expenses583 Starting a Business
& Keeping Records587 Business Use of Your Home