Business Bartering and Taxes
Yup. There’s a form for that, too.
Chef Louie was in a pickle. It was tax season. And those taxes weren’t going to prepare themselves. Cash was tight. Despondently, Chef Louie walked down the street with his hands in his empty pockets. Then, Hark! What was that? He heard of a guy, Tax Man Stan, who was into barter. No money changes hands?! Could there be a way out? Chef Louie’s spirits were rising like a double decker devil’s food cake.
They met. Tax Man Stan’s ex-wife Nan had been needling him to provide something for their daughter Fran’s baby shower. Tax Man Stan agreed to do Chef Louie’s $650 taxes, and Chef Louie agreed to cater $650 worth of pink and blue themed delicacies. They smiled, shook hands, and got to work.
What is Charity?
It’s better to give than to receive.
– My mother (and possibly yours), transliterating Acts 20:35
Charity is people with more than they need, giving that ‘more’ to other people who don’t have enough. Charity is recognizing that no matter how high you push the thermostat, you aren’t going to get more comfortable; no matter what you pay for your steak, the plate will be clean in 20 minutes; no matter how much gas your vehicle guzzles, the tank will soon be empty, and furthermore, recognizing there are plenty of other people with no heat, no food, and no way to get around – and then giving of your own time and/or money to do something about it.
Charity is sharing.
Meals, Part 5: Employees gotta eat, too!
How and when to take a meal expense when you are an employee
Employees sometimes have business expenses. Typically, these are union dues, uniforms, education, and professional licensing, education, and insurance. It is rare for an employee to entertain clients without being reimbursed by the employer, but it is possible.
It is more likely for an employee to incur a meal expense while traveling for business. In this scenario, there is usually a reimbursement, but the reimbursement does not cover the full cost. Like the items listed above, any expense that is not reimbursed is a possible tax deduction. But that does not mean anything you eat or drink while at the seminar in New Orleans is business related! Those cute little bottles on the flight and in the mini-bar of your hotel room are not meals and do not count. A mid-afternoon ice cream, candy bars from the hotel store, and espresso in the lounge are also not meals. Meals are breakfast, lunch, and dinner. Skip breakfast and go drinking after class? Don’t try it: your documentation will out you.
Meals, Part 4: The Take-Out Window
What about eating at your desk?
In a word: NO!
Remember that pb&j that you slapped together at home this morning and then stashed in your bottom drawer? You don’t get to take that as a business expense, so why would anyone think it counts if you have a deli sandwich delivered in the middle of the day?
Well, actually there is a precedent. Let’s say there’s a big project, and the boss is worried about the deadline. The boss just might spring for Chinese to encourage the team to stay late. This counts! Check it out –
Meals, Part 3: Indigestion
Common pitfalls in the area of Meals & Entertainment
No meal was ever enjoyed more than the meal you wrote off as a tax deduction. But was it legit?
In my experience, this is one of the most abused deductions available to the small business owner. All too often, the small business owner considers every activity a business deduction from the first step outside the home in the morning until returning to the home in the evening. When the business owner meets a business buddy in a coffee shop, and they each buy a sandwich and eat together companionably, they each believe they’ve just had a deductible business meal. If the business owner is on a trip, every cup of coffee, and even the tiny little airplane cocktail get tallied up for a meal reimbursement. Sadly, none of these are valid deductions as Meals & Entertainment.
Meals, Part 2: Have your cake and eat it, too!
How to properly document your meal expense
What a great lunch! You just convinced Gidget (of Gidget’s Widgets) not only to carry your patented micro-widget, but also to devote an entire edition of The Wonders of Widgets magazine to the marvels of micro-widgets. You smile broadly as you sign the credit card receipt, tuck a $7 cash tip under the water glass, and (making small talk about the frightful weather) walk with Gidget out to your respective cars.
Stop! Let’s rewind a bit, because if we don’t, you aren’t going to be able to support the meal expense. Sure, it definitely had an acceptable business purpose, and for $44.44, the meal was certainly reasonable – not too fancy, not too plain. But you’re still forgetting a few things.
Meals, Part 1: Food, Glorious Food
First in a short series on the Meal Expense
A good old turkey club…
a crock of French onion soup…
and anything alfredo…
Everybody likes to eat, and getting to take a meal as a tax deduction only makes it sweeter.
To Blog or Not to Blog?
Well, in this day and age, the answer is easy: Blog! Even a numbers person, like myself, has to have a chance to work with words from time to time.
In this blog, I’ll share all sorts of scintillating tax tips and amazing accounting actions and brave bookkeeping efforts. I’ll toss in some Tales from the Trenches, aka true stories – with names and pertinent details changed to protect the identities of both innocent and guilty alike, of course. And book reviews: you gotta have book reviews from time to time. (There might even be stuff not exactly related to accounting.)