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As an Accountant, I have more than a few pet peeves, some of which I will talk about from time to time here on our blog.
Today’s pet peeve is the “you must itemize your revenue/income accounts for Uncle Sam”. FICTION!
Let me explain, I am not saying it is a bad idea. As a matter of fact, it is a good idea for managerial purposes (I will tell you why a bit later) but for IRS or Tax Reporting Requirements it is not required.
Lots of businesses are operated out of home offices and business gurus promote a home office as an attractive way to reduce your taxes. While the tax reduction can be attractive, it is not a well-understood deduction and too many entrepreneurs expose themselves to the risk of audit by painting everything in their home with a “business use” paintbrush. Every single year without fail, I get several questions on how the US home office deduction works. Hopefully this blog will explain it in detail, while saving you from the headaches and hassles of explaining to an auditor about how the antique armoire in your bedroom is a business expense.
I’ve worked with companies whose file folders were color-coded: Blue meant one thing and red meant another. And chances are, if your files are color-coded, your office (like most others) uses a filing system of bland corporate beige. In this blog, I’m suggesting that your files should be all green!
No, this isn’t a pre-St. Patrick’s Day prank. Green files are far better for your business in a number of ways.
When I say “green” files, I don’t mean that they are green in color. I mean that they are ecologically-friendly. When I say “green” files I’m referring to scanning your files and paperwork and storing it online instead of in those giant filing cabinets that seem to multiply like rabbits in a busy office.
Online file storage companies offer a variety of services relating to storing and sharing your files. Now, I should make a clarifying point here: Some sites tend to have a greater emphasis on sharing. Sites like Box.net and YouSendIt.com are sometimes lumped into the online file storage industry but these sites are primarily there to help you ship big files from one place to another.
Every morning I collect the mail left by the postal service. There’s a ton of it and somewhere I think I can hear a rain forest weeping.
The junk mail – usually marked “to current occupant” – doesn’t even get opened. It goes into the shredder. The newsletters, fliers, newspapers, and magazines get sorted into a “likely to read” and “unlikely to read” piles for the coffee table or the recycling bin respectively. And then there’s the other mail: Bills, reminders, letters from Mom. It goes into a “must open” pile. It’s the stuff you have to read and act on. Unfortunately, even that pile can be a big stack. And once you’ve acted on it, you sometimes still need to keep it around. Bills and tax forms, for example, are things that you probably don’t want to through out. You act on them but, after that, you might need them for tax purposes or reference, so they go into a file folder. Those file folders can swell over the year. By the end of the year, you’ve got a filing cabinet drawer devoted to papers you hope you never need again but can’t throw away. Problem is, these papers need to be kept around for various bookkeeping, tax-related, or review purposes… perhaps for a few years!
