How to get every stinking tax deduction

It hap­pens every year.  A client wan­ders in with a shoe box and a prayer and wants me to put a mir­a­cle out of my hat.  Then they get depressed or angry or both because they have to pay tax, some­times a lot of tax.

So you wanna know the secret to get­ting every stink­ing tax deduc­tion you are enti­tled to?

Rule No. 1. Keep good records. It is as sim­ple as that.

Rule No. 2. Keep things sep­a­rated.  If you have a busi­ness, its records need to be sep­a­rate from your per­sonal stuff.  If you have mul­ti­ple busi­nesses, their records need to be kept sep­a­rate from each other as well. Min­gling your busi­ness and per­sonal finances is bad.  Sep­a­rate busi­ness and per­sonal bank accounts are good.  Only pay busi­ness expenses using busi­ness accounts, and per­sonal expenses using per­sonal  accounts.

Rule No. 3.  Keep every stink­ing receipt. No exceptions.

Rule No. 4.  Invest in some way to keep every­thing sep­a­rate and orga­nized–files, envelopes, piles on your desk, bank accounts, credit cards, ledgers, etc. set up a sys­tem AND use it.

Rule No. 5.  Invest in a pen & a sta­pler. Use the pen to make notes on your receipts so you can write down what it was for on the receipt.  That busi­ness trip, Where & What for, needs to be doc­u­mented on the receipt.  That busi­ness lun­cheon, Who was there, What busi­ness was dis­cussed, needs to be doc­u­mented on the receipt.  Sta­ple credit card pay­ments to the bill they go with.  When you pay a bill, write down How you paid, the amount and when.

Rule No. 6. Get a mileage log and use it reli­giously.  Have one for every vehi­cle.  Lots of mileage is deductible, but only with a log cre­ated at or near the time the mileage is incurred.

Rule No. 7. Learn the rules. No one is respon­si­ble for your stuff but you. If there are any spe­cial deduc­tions: Home office, gam­bling, real-estate pro­fes­sional, etc. that you’ve heard of and want to use, learn the rules (www.irs.gov has a won­der­ful search fea­ture) and fol­low them.

Rule No. 8.  Keep a sched­ule. Once a week or twice a month, to sit down and orga­nize every­thing, do your book­keep­ing and filing.

Rule No. 9.  Hire com­pe­tent pro­fes­sion­als if you need them. If your finances are com­plex, maybe you need  hire pro­fes­sion­als such as lawyers, CPAs, finan­cial plan­ners and book­keep­ers AND use them.

Rule No. 10. Take per­sonal respon­si­bil­ity for your finances — that is how the adults do it.  Don’t blame the book­keeper for poor finan­cial results if you only show up once a year with incom­plete records.  Don’t blame the CPA if you did not pay your esti­mated taxes. Don’t blame the attor­ney if you did not give them enough infor­ma­tion to ade­quately advise you. Garbage in, Garbage out.  Your records are only going to be as good as what you put in–com­plete records that main­tained cur­rently yield the best results.

As always, small busi­ness ser­vices and tax­a­tion are our busi­ness.  If you need help with taxes, or other ser­vices,  Please give Art & Busi­ness Con­sult­ing a call.  We would love to engage you as a client.

(602) 717‑0763

Jake Beck­man, EA and Chief Small Busi­ness Prob­lem Solver at Art and Busi­ness Con­sult­ing LLC