Probably the most common question accountants get from their clients when dealing with taxes is “Is it deductible?”
To answer accurately, accountants evaluate all the facts we have against the most recent tax codes.
Often our job becomes explaining why something doesn’t qualify as a tax deduction. Some items that qualify may seem very similar to others that unfortunately are not tax deductible.
Simply the fact of owning a business does not generate special tax breaks. Tax incentives and benefits only become available when businesses actively spend money on commercial activities. And of those activities and expenses, only those expenditures ordinary and necessary to the operation of the business are deductible.
Using the monies of a closely held corporation to pay personal expenses does not make those expenses tax deductible. Unfortunately, some business owners are not reminded of this until they meet with their accounts who are forced to remind shareholders of tax regulations for small businesses.
The key is being thorough. Take advantage of all business incentives that are available to you but also take care to stay within tax codes. And if you are unsure of whether or not something is deductible, just ask your accountant.
For more information on tax deductions, call Beaton Accounting today at 631-921-6894 for a free consultation with an accounting professional.
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