Taxes are something that nobody wants to pay! Everybody is trying to avoid (not evade) paying taxes, using the rules framed for the taxes.
Businessmen too are no exception.
Even while Government provides a variety of rebates for business, especially small business, businessmen still wonder how to reduce their tax.
We give below some tips that are forgotten in the maddening rush for business.
Remember to consult your tax lawyer to check this out.
For starters, businessmen, and indeed other people should know what are 'deductible' expenses each one is entitled to.
For example, businessmen are allowed to deduct expenses directly related to the business.
For example, the telephone expenses at the office, and partially the phone at home, provided it is also used for business, the mobile set, and its charges, airline tickets provided it was for business, and so on.
Using your car for business? Maintain a log of the mileage when you started, and when you returned, with a separate column showing what it was for, like visiting a client, give as many particulars as possible.
Keep the gas receipt you put in as a voucher and paste it in the logbook.
At the end of the year, total up your mileage and the gas you paid for during that trip.
If you stayed out of town, keep a copy of your hotel/motel receipt.
All these are deductible.
Time to calculate your taxes? Work out how much you can deduct by using the mileage you rolled, or by another method in which you can deduct the total you paid for gas, repairs, etc.
, according to a tax code schedule.
See which one gives you a better tax advantage, and use it.
Be sure to add your hotel/motel expenses and also your coffee and tea, breakfast, lunch etc.
The key to deductibles is the receipts/vouchers.
If you can produce them, you are entiled to the deduction, if not, forget about it, and pay your tax.
Very often most businessmen forget to collect receipts for everything they did on the road.
Without receipts, you just can't claim.
Make it a habit to collect receipts.
Put them in envelopes, or better still enter them into your computer under a head Business Travel expenses, and lock them up.
Auditors are fussy about receipts.
So why trip them up? If you are too busy with other matters give them to a junior to keep track and total them up.
Bills and receipts are required for everything you wish to claim under business: telephone bills, mobile bills, business lunch/dinner bills, flowers bill sent to customers or business associates..
the list is endless.
When you are entertaining clients, you are entitled to a fifty per cent deduction - provided you keep the receipt; when you host a party or any event for employees you get to deduct the whole of that expense; provided you keep a bill and a receipt.
The whole sum of the game is that you must keep receipts, bills, logs of what you spend, so that you can claim those as deductions.
Without receipts and bills, sorry boss, you got no chance of claiming them as expenses.