I’m planning to start a small business, but I’m worried I’ll do something wrong and violate IRS rules.  What can I do to avoid trouble?

The best way to avoid problems is to keep detailed records and to seek the advice of financial professionals.  For example, if you’re making deductions for auto expenses and for advertising, you’ll need to keep all canceled checks and other documents pertaining to those deductions.  Be especially vigilant with maintaining records for travel, entertainment, and auto expenses, as the IRS tends to focus on these areas when conducting audits.  Four Brothers Financial can help you devise an effective recordkeeping system that keeps the IRS happy, and your business in full compliance with the law.

Can I deduct expenses from using my car for business?

Yes, you may take a deduction for automobile use.   However, you’ll need to keep detailed records to support this deduction, in case the IRS decides to audit you.  Your records should include a log of all miles traveled for business purposes, with a notation indicating the purpose of the trips.

Are deductions allowed for business-related entertainment expenses?

Entertaining customers is sometimes a key part of the job, so the IRS does allow deductions.  You may only deduct 50% of the expenses for a business lunch or dinner though.  Besides meals out, deductions are permitted for taking a client out to a ball game or even hosting a client dinner at your home.  If you have any questions though, it’s best to consult a financial professiona before filing the deduction.

What is the Alternative Minimum Tax?

Originally, the Alternative Minimum Tax, also known as the AMT, was designed to close loopholes that allowed high-income taxpayers to pay little or no tax.  The AMT required taxpayers to pay a minimum amount of tax and calculated income by an alternative set of rules.  In theory, this sounds like a smart idea, but in recent years the AMT’s reach has extended beyond taxpayers with high incomes.  As a result, many taxpayers find themselves unexpectedly subject to the AMT.

Do I have to pay the Alternative Minimum Tax?

Determining  whether you’re required to pay the AMT is tricky, as a number of things on your return can effect liability.  Typically, an AMT exemption is offered to taxpayers with moderate income levels, but after reaching a certain point the AMT still applies.  Because calculations are complicated, it’s smart to consult a professional accountant with any questions.

I want to sell my business but I’m not sure how much it’s worth.  How can I start this process?

A professional consultation is the best way to determine an accurate and objective price for your business.  Four Brother Financial offers comprehensive business valuation services, and we’ll walk you through all the steps involved in preparing your business for sale.