As a “numbers” person, I’m forever looking for ways to apply the latest tax deductions to my industry outings. So while driving to a business luncheon, I saw several Georgia peach stands that had me thought about some ‘peachy’ sweet tax deductions. As a business owner, you need to acquire sure that you are enjoying the many tax advantages available. But there are multitude of legal amenities for you to deduct your business meals and other associated entertainment expenses. Here are a few key strategies to keep in mind as you legislation your business meals.
‘Peachy” tax strategy #1 – Organize your business meal for the purpose of discussing specific business
Your prospect must reasonably expect a business reason for the meal or entertainment. This purpose can be anything on “trying to obtain a referral” to “talking about utilizing your services.”
‘Peachy” tax strategy #2 – Make sure you discuss business when you eat your ‘sweets’
You must substantiate your meal or entertainment by answering these five questions:
·Who? Identify the person(s) entertained by name, official titles, and a greater number of information to establish the business relationship.
·Where? Describe the place of the meal or entertainment, if not clearly written on a receipt (for example: you lost your receipt, so you hand-write a receipt for meals and entertainment less than ). Yes, you read this right. No receipts are needed for entertainment rates under per cost per the Income Tax Regulations.
·When? The date the meal or entertainment takes place.
·Why? Be specific, but to the point. For example “discussed probable joint venture” or “tried to get referrals”.
·How much? The cost have got to be recorded and evidence is required when the prices is or more.
‘Peachy” tax strategy #3 – Sweeten the Pot: Deduct “associated entertainment” among your business prospect
‘Associated entertainment’ takes place in a non-business setting. However this ‘associated entertainment’ must precede or follow a substantial and bona fide business discussion during the same day as the entertainment. So it’s okay if there are no business discussions during the entertainment. Nice to know, huh?
Author’s tip: Develop the habit of writing your business meals, associated entertainment, and other tax deductions in a tax diary or organizer. This will save you thousands and allow you to enjoy your business meals and entertainment without stressing about an IRS audit. How ass it is!
Tags: business luncheon, business meal, business meals, business prospect, business reason, business relationship, entertainmen, georgia peach, tax deductions, tax strategy