Business write offs

Not sticky at all. Just don't try to calculate the numbers on your own. Give your accountant all of the totals for utilities, homeowners insurance, etc. and the square footage used as office and the total square footage of the house. They should calculate the percentages for you.

You can basically write everything off that is business related but if you have alot of misc. expenses like car, gas, food- it can raise red flags.   Lets put it this way, you can write anything you want off as long as you don't get audited- the question is, what is the likelihood of you getting audited for trying to write off what you are writing off.  I can say I had $2000 in car expenses even if I don't have a car and never get audited- the point is, you don't want to go deduction crazy.

   You have an accountant- get a free consultation and get your money's worth from him by getting free info from the person that will be doing your bookeeping and taxes.  If there is anyone that knows and will be doing it, it will be your accountant. 

My accountant said it's not worth it since the house interest is already being deducted from personal.

Quote Originally Posted by dl36:



I might convert to home office...  by accountant said that she could continue to work with me and gave me a list today to thing to look at for deductions...

Car, repairs and maintenance
and keeping a millage log...

Remember one thing- your accountant is only a sponge.  She puts the numbers in from what you tell her.  If you give her BS info then she will put in BS info.  One thing for sure is that accountants know their stuff- they usually know when you are BSing and when you are trying to cheat your taxes- they balance all the numbers and know from the numbers.  That said, your accountant will most likely give you advice when you are giving her the figures- at least I would think so.  Lastly, since she is only a sponge (and hopefully she warns you of possible red flags), YOU are responsible for all your financials.  If you get audited, she has nothing to do with it- it's your responsibility- pick up any tax form and it will also tell you that.  If you get audited, guess what?  She will probably charge you for the work she has to do during the audit also.  Not trying to scare you but I know quite a bit about this stuff. 

That is correct to a certain extent. If you are a sole proprietor it is definitely worth it because it directly reduces Self-Employment tax. Every situation is different, but in the majority of cases it is very beneficial to take office in home because the portion that is not used to reduce SE tax goes to Schedule A (itemized deductions) anyways. So regardless you get the full write-off, but by using Office in home you also eliminate SE tax and get to include Insurance, utilities, etc.

Again though each individual is it's own special situation and what may benefit one person may not benefit the other.

It's very benficial for renters as apartment/home rent is obviously nondeductible on personal taxes unless you use business use of home.

It just depends but I'm sure my accountant is too lazy to deduct it for me.  He also said the extra charge he charges me will make the deduction negligable.

I'm setup as an S.  The LLC is the popular choice these days- difference is that you don't have to keep Minutes and board meetings etc.   If I had a choice now, I would probably setup as a sole proprieter since I don't really see many advantages to being an S- you can avoid some employment tax but you will have to pay a yearly $600 to the state- in Cali at least.  Keep it simple, focus on making money first. 

If you have an office and it is being used to run your business then write off a portion of the mortgage for that home/office space as part of doing business. This of course will go along with the utilities as well. The problem people get themselves into is writing off the entire portion. That is obviously going to be a red flag.

Quote Originally Posted by dl36:



not drawing a paycheck yet, invested some money into the business and floating it with that at this time, but at least the business is turning profit monthly...

Most people do not do this, but in my opinion it is necessary. I do it here with our business. The negative affects are that it affects your equity as a liability from the company, but it protects you depending on how your company is set up. 

Write the car off and all of it's expenses (Insurance, registration, gas, car washes, etc...)

As long as you can show proof that your car is used for business purposes you will be fine.

KOAJ

What's up brutha.....

Quote Originally Posted by dl36:



car washes? seriously?

There is strip club in my area that does regular bikini car washes....

That would be a nice write off for my $20 car wash (and the extra tip on the "private show")

Writeoffs- you won't get 100% deduction since your vehicle is not used for biz 100% of its use.  It's a pain in the butt- keep all receipts, keep mileage logs so it's deducted as a percentage of use.  Depending on your business, it might not be many miles. 

If you write too many misc and car expenses off that is not the norm in your industry, you are asking for it. 

I'm not saying you should cheat the system (even though I do know it can be easily done and how), but you don't have to kill yourself keeping all these records.  Records are only needed during audit- and that is only if you get audited.  Some people have a better chance of getting audited by trying to keep too good of records while trying to Max Out all their deductions- sounds weird but the penny pinchers usually have excessive deductions also that raises flags.