Part of the series: 10 Small Business Tax Mistakes (Based on IRS Guidance) Proper documentation is an important part of maintaining accurate business records. IRS Publication 583 and IRS Publication 463 explain that taxpayers must keep records that support the income and expenses reported on a tax return. Certain expenses, such as travel, meals, and … Read more
Part of the series: 10 Small Business Tax Mistakes (Based on IRS Guidance) Some tax provisions allow business owners to defer or reduce taxable income through qualified accounts. IRS Publication 560 and IRS Publication 969 explain the rules for retirement plans and Health Savings Accounts (HSAs). These accounts allow eligible individuals to make tax-advantaged contributions … Read more
Part of the series: 10 Small Business Tax Mistakes (Based on IRS Guidance) Worker classification is an important part of complying with federal tax rules. IRS Publication 15-A explains that businesses must determine whether workers are employees or independent contractors based on common law rules. This determination affects how wages are reported and whether employment … Read more
Financial reports, such as profit and loss statements and balance sheets, are often used to understand how a business is performing. While these reports provide important information, they do not always show the full picture on their own. Looking at reports without additional context can sometimes lead to confusion or incomplete conclusions. What Financial Reports … Read more
Part of the series: 10 Small Business Tax Mistakes (Based on IRS Guidance) Business expenses can reduce taxable income, but spending money solely to reduce taxes does not automatically improve a business’s financial position. IRS Publication 535 explains that ordinary and necessary business expenses may be deductible when they are directly related to operating the … Read more
Part of the series: 10 Small Business Tax Mistakes (Based on IRS Guidance) Accurate financial records depend on tracking activity across all accounts used for business purposes. Internal Revenue Code §6001 requires taxpayers to maintain records sufficient to establish the income and deductions reported on a tax return. These records must reflect all financial activity … Read more
Many small business owners review financial reports such as profit and loss statements or balance sheets, but these reports are often looked at separately. Your financial reports are connected. Understanding how they relate to each other can make it easier to see the full picture of your business. The Main Financial Reports There are a … Read more
Maintaining organized financial records is an important part of running a business. Proper recordkeeping supports income and expense reporting, provides documentation for deductions, and ensures businesses can respond to financial questions as they arise. Below are common types of records businesses should maintain. Income Records Businesses should keep documentation that supports all income received. This … Read more
Part of the series: 10 Small Business Tax Mistakes (Based on IRS Guidance) Accurate records depend on tracking all business income and expenses. IRS Publication 535 explains that businesses may deduct ordinary and necessary expenses related to operating the business. To claim these deductions, expenses must be properly recorded and supported by documentation. When expenses … Read more
Many small business owners take on as much as possible themselves, especially in the early stages of business. At first, this often feels practical. Over time, however, it can become harder to keep up with everything that needs attention. As daily responsibilities increase, bookkeeping and financial admin are often pushed lower on the priority list. … Read more