Small Business Taxes: Preparing for Tax Time

Date posted: March 11, 2014

By William Olsen

When it comes to 2013 tax information, your tax preparer generally gets everything from official tax forms (like W-2’s, 1099’s, 1098’s, etc.), to bank and credit card statements, to summarized lists of expenses and various deductible items. Believe it or not, they still get a shoe box full of receipts from time to time.

As you sort through your information, you sometimes think it has to be an “all or nothing” proposition. But to a skilled tax professional, partial information can be helpful as they search whatever you give them for clues to “mine” for more deductions.

Mileage and expenses are common deductions for which records are often incomplete. The following ideas may be helpful to you as you sort through your records for 2013 taxes. When it comes to being ready for 2014 taxes, Deductr is a tool you can use in your business to help you save tax dollars that you would otherwise miss out on.

Mileage: A common misconception regarding mileage logs is that you need to have an odometer start and end reading for each mileage log you record. That would require you to write down your beginning and ending mileage each time you get in and out of your car. An odometer reading is only necessary at end of each year (which becomes the beginning odometer reading for the next year). Any “updated” odometer readings during the year, especially from third party service records, become corroborating evidence to support your vehicle use claims.

But what if you don’t have a complete mileage log for the entire year? Partial records can be useful to a tax preparer as the IRS allows sampling for some deductions. Sampling can be helpful if you can demonstrate by other evidence that the periods for which an adequate record is kept are representative of the use throughout the tax year.*

Expenses: If you used a specific bank account or credit card account for most of your business expenses, or if you tracked your deductions faithfully for just one month, your tax preparer can see the types of expenses which will prompt him or her to ask you more specific questions for more similar expenses throughout the year. **

*You should consult with your tax professional to see how this applies to your specific tax circumstances. 

William Olsen is a CPA and cofounder of Deductr. Deductr helps you track your income, expenses, mileage and time and will give you real-time feedback during the year.

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