Accounting

One way to describe business outsource process is the lowering of the financial burden throughout the tax season. Another, a guaranteed way to towering success of your organization! Competitive work efficiency, perfect accounting and the management of heavy monetary resources are again the parameters which define grueling procedure of accounting. Tax return was never without usual headaches, literally. And when this was equally magnified with the absence of a highly rated staff that could deliver, financial advisers sought other ways. The most effective however proved to be accounting business outsource process which is now a time tested procedure. The workload is considerably reduced with the outsourcing process as the professionals come with their own unique skill sets. Accounting assistance is sought by concerns worldwide to buy the services at a much lower rate than ever.

To reap the windfall, which is associated with the market growth, accounting departments should be in top gear to function as smoothly as possible. Serious efforts to kick-start the growth engines of a company require special training module developed by the US CPA’s. It is for the purpose of getting accustomed to work as per the client’s wish and help the accounting firms arrive at a meaningful profit curve. An advantage which is associated with accounting business outsource process is the freeing up of internal resources and manpower. This further helps in the diversion of your energies towards more meaningful pursuits. Highly qualified accountants manage a lot of accounting tasks like data entries, creation of annual financial reports and tallying transactions. Compilation of the tax statements are a complex procedure and only experience can save the day for the companies. Outsourcing the accounting business outsource process helps the client companies to fill their taxes in a simple way within specified time-frame. The financial advisers guide you regarding various techniques for the reduction of your total tax amount in a legal way.

Perfect timing and an accurate knowledge of accounting processes are important for an accounting department. Any sort of indiscipline on the part of in-house staff breaks the chances of success and therefore outsourcing the services of accounting business are a must. Only a planned research in this direction is meaningful which improves the performance levels of an accounting department and thereby the said company. Certified accounting outsource firms are a guaranteed way towards reliability of their services they render. Internet and the consultancies are the preferred mediums to avail of the information regarding some of the reputed business outsourcing firms. A complete profile of the vendors is displayed including the projects they have undertaken along with the specialization and their list of clients. Accounting business outsource process is thus your ticket to arrive at an exceptional growth chart.

The project based nature of the tasks involved makes their delivery easy and within a fixed time-frame. For many organizations, accounting business outsource process has been instrumental in their phenomenal rise. Further, economically the outsourcing option is more suitable than the in-house staff as they being the thorough professionals come with very less demands. An improvised work mechanism helps your business to arrive grandly in the market arena. Since they understand that timely project delivery decides the fate of any organization, they ensure it is done that way. Also the cost factor proves to be an attractive feature for accounting companies to outsource the accounting business from manpower rich countries.

Michelle Barkley is a CPA who advises people on tax preparation and tax calculation. She specializes in bookkeeping outsourcing and outsourced accounting. To know more about accounting outsourcing, accounting business outsource process and small business bookkeeping outsourcing to use the services visit http://www.ifrworld.com

A new client recently told me of the problems he had trying to find a good bookkeeper and I thought it was a topic that may be worth sharing with you here.

When you get to the point in a new business venture that keeping the books yourself becomes an intolerable extra burden on already stretched time resources, how do you source, test, trial and finally secure someone to do the bookkeeping for you?

Do you - trust to picking the right advert in the yellow pages? listen to another business person about their bookkeeper? jump on the first person you come across that shows an interest in bookkeeping? ask your accountant? (If you have one), look for a bookkeeping institute website for member information? advertise yourself? ask one of you members of staff to deal with it?

I had not really considered it from a business persons view before but now I have, I can see the difficulties you face when tackling such an important decision.

Important decision I hear you ask? Yes.. IMPORTANT!

Your business records are the cornerstone of your business. You are legally obliged to keep them in the first place, keep them up to date in the second place, and have them as the main defense when the Tax Office or VAT Office come calling. Your bank manager will also either be impressed if you keep your books well and support you when you ask, or will run a mile when you look for an overdraft or loan simply because he cannot see any sense or method in your business due to your lack of quality records.

Neat and accurate records represent a good quality business, and untidy, incomplete records show your overall approach to your business - untidy, unreliable and confused.

A good bookkeeper is therefore VITAL to your business - but how do you find such a beast??

My best advice is to search Google and go the the website of the Institute of Certified Bookkeepers.

This is because you cannot take any chances with people dabbling with your records. Each member of this institute has proven themselves in examination that they have a solid knowledge and understanding of bookkeeping and all associated issues. You can trust each member to act in a professional manner and keep your detailed, personal information completely confidential.

You can rest assured that the Tax Office and VAT Office will have no chance of undermining any records kept by a member and your bank manager will be seriously impressed.

Why take a chance on such a important job being left to Auntie Joan, or Fred in sales just because they say they can work a computer bookkeeping package? There is simply no substitute for experience!

Any ICB qualified bookkeeper will be a significant asset to your business and far outweigh their cost with the service they provide.

-Ray

Ray Stewart is the MD of Coalville Business Services Limited. He writes articles and reports about bookkeeping and business growth strategies, the two areas of business he is most passionate about. His bookkeeping business website is at http://expertbookkeeping.info and is a free resource for people looking for simple answers to bookkeeping questions and a chance to speak to him for free if you can’t find the answer you are looking for. You can also visit his private blog at http://raystewart.biz and subscribe to the RSS feed there to keep right up to date.

Financial records are the backbone of any business organization. Speak to the head of any enterprise and you will know the importance of this asset in the growth of any organization. Maintenance of daily records is one of the important facets of any business to keep the track of their financial condition. Different record-keeping systems are used by different organizations for this purpose. Outsourcing bookkeeping help is the best way to engage your business in a purposeful way, so that the profits are doubled from the word go. Seeking to outsource the bookkeeping surely helps you in maintenance of your daily financial records in a systematic method. With a proper bookkeeping system in place, keeping accurate records takes just a few minutes instead of slogging for longer hours with the back-breaking task. Accountants who have got relevant expertise are hired for this purpose, gained due to handling similar cases for other reputed business organizations.

A number of points have to be taken into consideration before setting up of a cash-based or accrual-based accounting system. Mostly, the accrual system proves to be better for the companies because of their flexibility to handle the timely credit transactions. In others, you might need the simpler cash system. Bookkeeping help assists in an organization’s redirection of their resources towards other divisions, whereby the said company’s growth curve is doubled. Outsourcing thus helps in an accuracy of the financial data and a better quality of their service. A number of bookkeeping guidelines are utilized by the professionals for securing the finances of any company. Notable amongst these are saving the receipts, tracking expenses, non-payment with personal accounts, classifying the employees properly, reconciling the books with a bank statement and backing up your files. Bookkeeping help is sought after by the business organizations today, because they help in deduction of sales tax from the total sales and a proper upkeep of the petty cash records.

Bookkeeping help is sought by any organization for an easy maintenance of their financial records and is quite an effective system. The bookkeeping personnel help a business venture to keep their invoices and checks in numeric order and maintain separate bank accounts for your business and personal funds. Software used in bookkeeping is essential for the upkeep of records even in a small business, whereby it becomes quite easy to track income and expenses, preparing the tax documents and summarizing the financial activities and backup records for safekeeping. A positive reference of firms who have utilized the services of bookkeeping earlier and other references go a long way to hire the personnel from outsourcing firms. The computerization of the financial records makes their compilation process easier. The processed records are sent back periodically to the client company and this reduces the errors in final statements.

A number of transactions often go unnoticed due the non-availability of time. On the part of in-house staff as well, there might occur an error which mars the chances of success of any business organization. A last minute solution to these errors is not an answer then, as the lapses are many and time at a premium. Bookkeeping help is, therefore, sought by the companies to get a balanced transaction and accurate record statements. Your business is thus sure to claim the heights you had always wished for.

Alvis Brazma gives advice to business owners about how to manage their business efficiently without any hassles.To know more about Accounting help, accounting outsourcing, retail accounting, bookkeeping help visit this leading internet source: http://www.impacctusa.com

It’s no secret that commercial accounting software isn’t cheap. Quickbooks Pro will now run you around $200, and I just checked Peachtree products and found them costing anywhere between $70 and $1200 depending on the number of users of the product.

Pushing that free “Download” button…

We’re all familiar with free shareware on the Internet, most of it claiming to have all the functionality of the commercial packages, and it’s tempting to push that “download” button and start using it right away, at least until our businesses get “up and running” and we can afford the name brand stuff.

But before you start managing your vital resources and expenditures with something a techy devised because he or she thinks software on the Internet should be free, you might want to keep some things in mind…

Free isn’t always free…

Here are some potential drawbacks to free “shareware”, many of which have been posted in forums on the subject:

1. No help files. A lot of software on the Internet has tremendous functionality, rivaling and even surpassing its commercial counterpart. But if you get into a problem…something you can’t understand or make work and there is no help file on the subject, you might find yourself stuck.

2. The authors don’t communicate well in English (or whatever your native language is). Yes, you do have help files, but the author lives in Venezuela and writes in broken English. Your business depends on this fantastic free software and you can’t understand the instructions to keep it running.

3. Everything works great but it can’t print. You really don’t want to store everything on a hard drive that might crash, and you still want a paper back-up. Unfortunately, the author of the software didn’t think anybody wanted that.

4. It’s only partly compatible with the operating system you’re using. For example, it works great with XP but won’t open Vista files. You find you’ve wasted a lot of time inputting data only find you can’t save it (or open the file later).

5. The publisher wants too much information from you. Some publishers want to know everything about you - information it might be dangerous to divulge. Don’t give out sensitive information (such as your social security number) in order to get a free piece of software.

6. It’s difficult and clunky. Yes the functionality is there but the time and effort it takes to enter the data and get it into a form you can use makes its “free” price tag not worth it.

7. There is no support. This may be the most critical aspect of free software. What kind of support will you get if down the road you find your “free” version develops a bug? Will it still be available for download? Or will it have disappeared off the Internet, leaving you with a hard drive full of records you can’t access?

8. Incompatibility with commercial programs. When you can finally upgrade to a commercial software package, will this free program be compatible with it? Will the commercial program be able to access the folders and files created by the freebie so you can continue your business?

Before you download, read between the lines…

As I implied at the beginning of this article, most of the “free” packages are reviewed in the forums, where users anonymously assign stars and say what they think. The problem with that is that one doesn’t always get the whole story. For example, two comments are posted about a “Code” being required for the same piece of software. One reviewer didn’t mind entering the Code, and the other stated that the Code required too much personal information. In another instance, for a piece of software receiving 4 out of 5 stars, the four rave reviewers couldn’t speak highly enough of it, while another claimed he couldn’t create files. He was running Vista. The others were running XP.

The moral of the story…

Is to be careful. Be sure you thoroughly research out any new piece of “free” software you are considering using for your business. Keep in mind that a lot more is at stake here than is the case with another type of application, such as entertainment or photo retouching. Your business, and your future, is going to depend on whoever developed it, how much support he intends to provide for it, and whether or not you will be able to utilize the support he does provide.

Utilizing free downloadable accounting software can be a wonderful boon…or a spectacular future disaster for you and your new business.

John Young is a writer and editor living in Southern California. He is editing two online ezines, Accounting Software Guides And Reviews

http://www.accounting-software.how-to-zine.com

and Explode Your Affiliate Checks

http://www.explodeyouraffiliatechecks.com

1. Without using a professional, you will question if you are getting all the benefits of tax credits and deductions that are available to you. Many tax laws change near the end of the year (sometimes the beginning of the following year) with retroactive impact. Most good CPAs will go to a tax training session near the end of January or early February to get the latest information.

2. A good CPA will help you focus on profitability and where you should place your efforts. The CPA looks for a long-term relationship with you and will work to understand what your goals are and how you can be more efficient in spending your time on profitable lines of business

3. A good CPA will keep track of all the little things that need to be completed to keep your business current. They will advise you of due dates and the need to complete these forms. We all get plenty of information that we look at and set aside. Certain of those items are important. A good CPA will advise you whether to put the form in the trash or to complete it so it doesn’t negatively impact your business.

4. Are you avoiding unnecessary penalties by filing all returns timely? Most CPAs track due dates for their clients and automatically prepare extensions when information is not available. They will generally contact you and make a best guess estimate of what tax is due. They realize that an extension is an extension of time to complete the return - not an extension of time to pay the tax.

5. Are you being informed of changes that may impact your business or industry? Since a CPA is looking for a long-term relationship, they generally communicate with their clients to advise them of changes in tax laws that could change the way you do business. If there is additional cost to you, you need to know before it happens so you can include these additional costs in your quotations. A good CPA will advise you of these types of changes.

6. Is your tax return (personal or business) being prepared on a “box software”. Most good CPAs use a professional software that understands the tax laws and generally advise the preparer of possible alternative tax treatments that can save you money. Many times, these suggestions include possible additional questions we need to ask you in order to make certain that your return is complete and accurate. A perfect example is when your children reach 18 years old. Are they still a dependent?

7. Is your personal information secure and confidential? CPAs are licensed by the state they practice within. They don’t generally operate out of department stores. A CPA can be sanctioned by their State Board of Accountancy or the American Institute of CPAs if they aren’t acting in an ethical/professional manner. Non-CPAs are not being bound by the same rules by these oversight authorities.

8. After April 15th can you contact your preparer? Many non-CPA firm entities are only open between January and April with limited or no access to the person who prepared your return. Why is this important? If you should get a tax notice from the IRS or State, who best understands the preparation of your return? A CPA firm is generally open for business 12 months during the year and available to assist you in handling tax notices.

If you’d like additional information on any of the topics listed above, please contact Marie A. Jakubiak, CPA @ jakubiak1@aol.com and visit the company website at http://www.majapc.com for even more valuable information.

http://www.IRS.gov

Probably the most common business deductions are meals and entertainment. However, people are often confused about whether the expenses are fully deductible, partially deductible or not deductible at all.

50% Deductible

The general rule for deducting meals and entertainment expense is that 50% of the cost is deductible provided the following requirements are met.

Requirement #1

The expense has to be ordinary and necessary in the trade, business, or profession. In other words, it must be commonly accepted to have this expense and it must be appropriate in the trade or business. For example, business owners routinely have lunch with prospective clients to discuss business with the goal of attracting additional business. This is a common and necessary business expense.

Requirement #2

The expense must be directly related or associated to the active conduct of your business. To meet this requirement, you must engage in a business conversation during, before, or after the entertainment. If the business discussion is only incidental to the entertainment, the entertainment expenses do not qualify.

The 50% limit applies to business meals or entertainment expenses you have while traveling away from home on business, entertaining customers at your place of business, a restaurant, or other location, or attending a business convention or reception, business meeting, or business luncheon at a club.

100% Deductible

As with every general rule, there are exceptions. The following exceptions result in the meal or entertainment expense being fully deductible.

Exception #1

The expense is fully deductible when providing meals, entertainment, or recreational facilities to the general public as a means of advertising or promoting goodwill in the community.

Exception #2

If the meal is provided to employees as a convenience to the employer on the business premises and is furnished to more than half of the employees, then the expense is fully deductible.

Exception #3

A company holiday party expense is an exception to the general rule and is fully deductible.

Non-Deductible Expenses

Items that are not deductible include membership in any club organized for business, pleasure, recreation, or other social purposes. The purposes and activities of a club, not its name, will determine whether or not you can deduct the dues. You cannot deduct dues paid to country clubs, golf clubs, airline clubs, hotel clubs, or clubs operated to provide meals under circumstances that might otherwise be considered to be conducive to business discussions.

To ensure that your qualified meal and entertainment expenses are deductible, you will need to have excellent documentation. Please contact your Tax Coach for more specifics about which documentation is required for meals and entertainment.

Tom Wheelwright is not only the founder and CEO of Provision, but he is the creative force behind Provision Wealth Strategists. In addition to his management responsibilities, Tom likes to coach clients on wealth, business, and tax strategies. Along with his frequent seminars on these strategies, Tom is an adjunct professor in the Masters of Tax program at Arizona State University. For more information please visit http://www.provisionwealth.com.

There are many possible answers to this question, from ignorance of bookkeeping to the proprietor focusing exclusively on the business growth leaving no time for other activities. However, this article will focus on the size of business - as a rule of thumb.

Most of our bookkeeping clients seem to fall into a certain size bracket. There may be many reasons for using us but we mainly act for businesses turning over up to 700,000euros per annum. I could analyse this all day but it seems when a business reaches this sort of size, the bookkeeping starts to be done in house by an employee.

I am always more than happy to be involved in the hand-over of the books from our bureau back to a dedicated employee and I will train them in the use of the package so that the client gets maximum benefit from them as soon as possible. I do not try and talk the client out of this move because I heartily agree with it. I will actively help them find and interview suitable people.

There have been two occasions in the last year when clients have got to that point and set on a bookkeeper but then it has not worked out. We have then taken the books back into the bureau temporarily. It is not because I have an underlying agenda to sabotage the client taking back the books, it is just that the vast majority of people see bookkeeping as beneath them as a job. In the two examples, both bookkeepers were excellent at the job but quickly became bored and moved on to proper jobs.

Personally, I can understand this as I see it from practising accountants all the time. They view bookkeepers as failed accountants and not worthy of acknowledgement and would they attach a bookkeeping service to their client offerings? not on your Nelly! They are qualified accountants after all, not bookkeepers! Professionally, I think they are barking mad. Every one of their clients keeps books so why is it beneath the average accountant to help small businesses with their books, or even take them off their hands altogether.

I love bookkeeping myself and I have never hesitated to help out or take over the books of even the tiniest of clients. Most of the downloads from the VT Software website are from our smaller clients! So. As far as the size of business who mainly look to us for help goes? From £1,000 to 700,000euros turnover per annum. These are generally growing businesses who are too busy to be involved with the books, who do not understand how to keep them anyway and who realize there are dedicated bookkeepers waiting to help for a reasonable cost, with all the backup of a full professional accountancy practice behind them.

Ray Stewart is the MD of Coalville Business Services Limited. He writes articles and reports about bookkeeping and business growth strategies, the two areas of business he is most passionate about. His bookkeeping business website is at http://expertbookkeeping.info and is a free resource for people looking for simple answers to bookkeeping questions and a chance to speak to him for free if you can’t find the answer you are looking for. You can also visit his personal blog at http://raystewart.biz and subscribe to the RSS feed there to be kept up to date.

Travel expenses are a favorite deduction of many clients, because they love to travel and especially enjoy it when the IRS is subsidizing part of the expense. In order to deduct travel expenses, however, you must show that the expense has a business purpose and is ordinary and necessary to the business.

Travel expenses that have a business purpose include:

- Meeting customers/prospects/vendors residing in a different location;
- Searching for investment property;
- Meeting with business partners, both current and prospective; and
- Holding annual shareholder meetings (usually held in conjunction with an annual board meeting).

The phrase “ordinary and necessary” generally is defined to mean, “in the ordinary course of business” and that “the expense will contribute to the success of the business.”

If a taxpayer travels to a destination and while at such destination engages in both business and personal activities, traveling expenses to and from the destination are deductible only if the trip is related primarily to the taxpayer’s trade or business.

If the trip is primarily personal in nature, the traveling expenses to and from the destination are not deductible even though the taxpayer engages in business activities while at such destination. Expenses while at the destination which are directly related to the taxpayer’s trade or business are deductible even though the traveling expenses to and from the destination are not deductible.

Whether a trip is related primarily to the business or is personal depends on the facts and circumstances in each case. The amount of time during the period of the trip that is spent on personal activity compared to the amount of time spent on business is an important factor in determining the deductibility of the travel expense. Generally, if business is conducted more than 50% of the time in an eight-hour business day, the travel expense is deductible.

Travel expenses incurred on behalf of a spouse, dependent or other individual accompanying the taxpayer are not deductible. However, if the spouse, dependent or other individual is an employee of the taxpayer or there is a bona fide business purpose, then the travel expense is deductible.

Travel expenses involving a cruise ship typically are not deductible. However, they can be deductible if you are attending a convention on a cruise ship and you can show that attendance benefits your trade or business. No deductions for cruise ship expenses are allowed for meetings related to personal investments, political causes or other purposes.

There are additional restrictions relating to cruise ship travel. For example, there is a $2,000 annual limit on cruise conventions and you must attach a written statement to your tax return that includes certain facts about the convention.

Normally, expenses require simple documentation such as a receipt. However, travel expenses require additional documentation. If the IRS finds the taxpayer does not have sufficient documentation, the expense will not be deductible. The taxpayer must document the amount, time, place and business purpose of the travel expense.

Sufficient documentation of a business expense includes receipts, cancelled checks or bills. Although a contemporaneous log is not required, we normally recommend that our clients keep an itinerary of the business trip listing all business activities as documentation of the travel expense. The log should list all elements of the expense (e.g., amount, time, place and purpose) as this has high credibility with the IRS. Documentary evidence, such as receipts or paid bills, is not generally required for expenses that are less than $75. However, the IRS has ruled that all lodging expenses must be documented.

The taxpayer may deduct a standard allowance as set by the federal government. This is called a per diem deduction. In lieu of receipts, taxpayer will deduct the per diem rates. Per Diem travel expense deductions are not allowed for owners.

Good news for those who hate keeping track of all of those pesky receipts when they travel. The IRS will allow you to deduct your meals and incidental expenses for travel away from home even without receipts. This is their Per Diem Allowance program.

The way it works is that the IRS has a table indicating the amount of deduction you can take on a daily basis for meals and incidentals while traveling away from home. If you choose to use this flat, per diem amount, you do not have to keep track of the receipts for these expenses. If you are not an owner in the business, you can even use the per diem method for travel and lodging. Owners can only use the per diem method for meals and incidentals.

Of course, per diem allowances, like deductions for actual expenses, may be used only if the time, place and business purpose of the travel are substantiated by adequate records or other evidence.

The IRS has issued per diem rates based upon the Continental United States (”CONUS”) travel and foreign travel. New CONUS per diem rates become effective on October 1 of each year, and remain in effect through September 30 of the following year. Federal rates are on the Internet at http://www.gsa.gov/.

If employee expenses are substantiated using a per diem amount, and reimbursement exceeds the relevant federal rates for that type of allowance, then the employee is required to include the excess in gross income. The excess portion must be reported on the employee’s W-2 and is subject to withholding. However, as long as the reimbursement amount does not exceed the relevant federal rates, then the amount is not taxable to the employee!

Other technical rules apply to using per diem rates. Be sure to work with your CPA to make sure you are following all of the technical rules before using the per diem method for documenting travel expenses.

Tom Wheelwright is not only the founder and CEO of Provision, but he is the creative force behind Provision Wealth Strategists. In addition to his management responsibilities, Tom likes to coach clients on wealth, business, and tax strategies. Along with his frequent seminars on these strategies, Tom is an adjunct professor in the Masters of Tax program at Arizona State University. For more information please visit http://www.provisionwealth.com.

Accounts receivable factoring is a simple and quick method for temp nurse staffing agencies, medical transcription services and medical coding companies to access working capital. However, certain requirements must be satisfied to take full advantage of accounts receivable factoring’s many benefits.

Sales must be final. The only way a company can factor an invoice is if the sale is final: the company provided a service (i.e. a medical staffing agency sent temporary nurses to work in ABC hospital) or a good (i.e. a medical supply company sold latex gloves to a doctor’s office), and the customer unequivocally accepted it.

Goods or services must be invoiced after they are received. Some companies bill their customers before providing goods or services. This type of relationship is unacceptable in an accounts receivable factoring transaction.

There can’t be any set-offs or charge-backs. Some company/customer relationships allow for set-offs, in which invoice deductions are made based on the receipt of goods and/or services over the amount due on the invoice. Similar to set-offs, charge-backs give a customer the right to deduct payment if goods are incorrect, faulty or damaged. Both of these practices affect the final invoice amount. While set-offs and charge-backs are common in many industries, they cannot exist when a factoring company is involved because factoring firms purchase the invoice in full.

Liens and lawsuits against a company complicate a factoring transaction. Liens and lawsuits affect a company’s welfare. In some cases, it’s possible for an accounts receivable factoring firm to work with a lien-holder to resolve difficulty. Lawsuits, on the other hand, could raise a number of issues, and need to be addressed on an individual basis.Prospective factoring clients need to be approved during a due diligence process. Most accounts receivable factoring companies will conduct a thorough review before a factoring relationship can be established with a medical staffing agency, medical transcription service or a medical coding company. While an accounts receivable factor’s decision relates to the creditworthiness of a company’s customers, it’s important for accounts receivable factoring firms to understand and evaluate its client’s history, operations and prospects. Full disclosure and open dialogue are the most efficient and effective means to a positive accounts receivable factoring relationship.Click here to see a step-by-step factoring diagram.

Philip Cohen is the founder and president of PRN Funding, LLC, which is an extraordinarily focused niche player in the healthcare staffing invoice financing market place. Through a process known as factoring, PRN Funding provides business owners with the financial resources needed to grow and effectively compete in the industry. With no minimums or fixed terms, PRN Funding provides medical staffing agencies with flexible and immediate access to capital. We give you the freedom to factor what you want, when you want, whom you want, for as long as you want. Prior to founding PRN Funding, Mr. Cohen was an executive officer of The MRC Group, a national provider of Medical Transcription Services. Contact Philip Cohen at toll-free 866.776.5407 or via email at pcohen@prnfunding.com Please visit PRN Funding, LLC on the web at http://www.prnfunding.com/

There are several specific rules to determine if a meal is a legitimate business expense. These specific rules include meeting the business purpose requirement and the ordinary and necessary requirement. In this article, it’s assumed that the meal has met these requirements and is indeed a business expense.

*General Rule

Meals are generally 50% deductible. This means when a business pays for a meal, only 50% of that amount is deducted on the tax return. It’s extremely important to know the exceptions to this rule because some meals are 100% deductible!

Meals that are 50% deductible include:

- Meals with clients, customers and vendors.
- Meals with employees
- Meals with partners, shareholders and directors
- Meals during business travel
- Meals while attending a business seminar or convention

**Exception to the Rule (This is a great exception!)

Some meals are 100% deductible! These meals include:

- Meals for the business holiday party or other social event (like the company picnic).

Office snacks provided to employees at the office. This may include coffee, soda, water, candy, donuts, and similar snacks.

Meals provided on the employer’s premises to more than half of the employees for the convenience of the employer. An example of this is when a business provides meals to employees in order to keep them working weekends or working later than usual. This is for the employer’s convenience to keep the employees at the office.

Meals for which the business is reimbursed for the expense. For example, if a business takes a client to lunch and then bills the client for that lunch in a separate line item on the invoice, then the business can fully deduct that meal.

Ever wonder why some accountant or attorney invoices show the meals expense as a separate line item? Because it makes the meal expense fully deductible to them and makes it 50% deductible to the client! Be careful if you are on the receiving end of this invoice!

If the meal expense is not specifically itemized on the invoice (and just lumped into the service fee), then the meal is only 50% deductible to the business and 100% deductible to the client.

*Important Tip: When it comes to preparing your tax return, it’s easy to forget which meals met the requirements to be 100% deductible. And if your tax preparer has never asked you this it most likely means all of your meals are being subject to the 50% limitation ! It’s best to capture this information when you actually have the meal. You can do this by setting up two meal expense accounts in your books:

Meals - 50% deductible
Meals - 100% deductible

Simply code it the proper account when you enter it in your accounting program (such as QuickBooks). Then it’s all ready for your tax preparer with no additional work!

Tom Wheelwright is not only the founder and CEO of Provision, but he is the creative force behind Provision Wealth Strategists. In addition to his management responsibilities, Tom likes to coach clients on wealth, business, and tax strategies. Along with his frequent seminars on these strategies, Tom is an adjunct professor in the Masters of Tax program at Arizona State University. For more information please visit http://www.provisionwealth.com