Year-End Checklist For Business Owners and Investors

Last week I shared a few items from the year-end checklist my team and I use with clients who own rental real estate.

Year-End Checklist for Business Owners and Investors

As I promised last week, this week I’m sharing a couple of items that apply to both business owners and real estate investors. Here they are!

#1 Get Your Books in Order

Do you view your bookkeeping as a necessary evil? As something you have to do so you can file your tax return? If you do, you are not alone!

I see bookkeeping a little differently. I see bookkeeping as a tool to boost tax deductions.

Bookkeeping is one of the keys to bringing a tax strategy full circle. It’s one thing to know what’s deductible and how to maximize your deductions, but unless that gets reflected in your bookkeeping, it’s as if the tax planning never happened at all.

Here are a few tips on what to look for to make sure your books are in order:

Make sure your bookkeeping is current. Ideally, this means your bookkeeping is up-to-date through the end of last month, or last quarter. As time goes by, so does the likelihood of capturing deductions that have been missed – this is why keeping your bookkeeping current is so important to your tax savings!

Verify accounts are reconciled. This simply means making sure the balances that show for your bank accounts, credit cards, receivables and liabilities are accurate. Reconciling your asset and liability accounts is the first step to making sure your bookkeeping is accurate and deductions are not missed.

Look for what’s missing. It is very common to pay for business or investment expenses personally. This can result in missing these expenses in the bookkeeping for your business or investment which means missing potential tax deductions. Be sure to reimburse yourself for these expenses – the reimbursement puts the deductions on the books.

#2 Document Your Travel, Meals and Entertainment

Travel, meals and entertainment are perfectly legitimate tax deductions as long as specific rules are met.

One of the rules for deducting travel, meals and entertainment is to keep proper documentation. In fact, if you are audited, you can count on a request for documentation that supports these deductions.

Proper documentation includes:

Amount of expense

Description of expense

Location of expense

Date of expense

Business purpose of expense

Names and business relationship of the people involved

Don’t take your documentation lightly! There are plenty of tax cases where travel, meals and entertainment expenses were disallowed specifically because of improper documentation. This means that even if a travel, meal or entertainment expense is perfectly legitimate, it can be disallowed if the documentation is not proper!

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