TAS 251 : How to AVOID Common Tax Mistakes in Your Business (CPA Guest)

Running a business is complicated in and of itself. There are all kinds of things you have to keep track of including taxes. There are many common mistakes made when it comes to taxes and on this episode of the podcast, Scott is talking with his friend Josh about the common questions that come to him when it comes to business text questions. Being a CPA, Josh has the actual answers you need in order to do things legally and ethically. You can hear all of these common questions and their answers on this episode of the podcast.

Are you calculating your product inventory the RIGHT way for tax purposes?

Many people think that in order to calculate their taxes correctly when it comes to inventory they simply need to add up how much they have spent on products during the calendar year. Scott's guess today is a certified public accountant and he says that is actually not the right way to do it. You will find up providing wrong figures to the IRS if you do so, and you could be liable for a much larger payment, plus penalties by doing it. On this episode, you were going to learn the right way to calculate inventory for tax purposes.

Is an IRS audit something you should be afraid of?

When you hear the phrase, “tax audit” it may cause you to break out in a cold sweat. But do you really need to be so concerned? What is the likelihood that you were really going to be audited? And if you are, which kind of audit is it that you should be concerned about? And this great conversation with a certified public accountant you were going to hear about the different kinds of audits, what each of them really is about, and what you should do if you are audited. It's a great episode to dispel a lot of the myths that are floating around in the business community, so make sure you take the time to listen.

What meals and entertainment are deductible?

Many people who run a business have been told that they can deduct meals and entertainment that have to do with their business with no problem. But is that entirely true? When this episode of the podcast a certified public accountant is going to tell us that you actually only get to deduct 50% of your meals and entertainment, and you can only do that if those are directly related to a business activity of some kind. If you want to hear the full story on this important issue, make sure that you listen. It could save you a lot of money in the end.

What business entity is best for your business?

There's a good deal of confusion about which business entity you should choose for your business activity. Should you be a sole proprietor? What about an LLC? Or maybe an S corporation or C corporation? If you're confused by all of these possibilities you are not alone. On this episode of the podcast, you will hear the definitions of each of these, what their advantages are, and how you should go about choosing the one that is right for you and your business. This section of the podcast alone is worth the time it will take you to listen.

OUTLINE OF THIS EPISODE OF THE AMAZING SELLER

• [0:09] Scott’s introduction to this episode!
• [3:19] How to deal with inventory as a business expense - the RIGHT way.
• [11:29] Turning common personal expenses into business deductions.
• [13:15] Home office space - how do you deduct it as a business expense?
• [16:14] When the IRS contacts you for an audit - how does it happen?
• [19:10] What meals and entertainment are deductible?
• [21:06] Bookkeeping issues: How should you keep your records?
• [25:41] A good rule of thumb for withholding federal taxes.
• [27:20] The various business entities you can do business as.
• [34:20] Can an S-corp be backdated to the beginning of your LLC creation?
• [38:40] The issue of sales tax: How should you handle it?

RESOURCES MENTIONED ON THIS EPISODE

• www.TheAmazingSeller.com/ask
• www.TheAmazingSeller.com/143 - Previous episode with Josh
• www.CPAonFire.com - Josh’s business website
• Xero accounting software
• www.Quickbooks.com
• www.WaveApps.com
• www.Freshbooks.com
• Bench Bookkeeping Service
• www.MyWifeQuitHerJob.com

www.TaxJar.com