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Tuesday, December 13, 2016

Cost of Confusion

How many ------ people does it take to change a light bulb? There are as many answers to this joke as there are to filling in the blank in the question.  But when it comes to purchasing a car, I recently came across a situation where it took 12 people from the dealer to be involved directly with me. I have purchased cars from dealers in the past, and it took only 2, sometimes 3 people to make the deal happen. This is a dealer that is out of control! This is also a story with many teachable moments. See how many mistakes were made. How many are made in your organization?


There were 3 sales people (one rather junior, who did most of the work. We all started somewhere), 2 sales managers, 1 technician, 2 sales administrators and finally 4 people representing the finance function (including one who collected the funds and provided receipts). I should make it clear that this was a cash sale, without any financing involved.


Previewing the car and coming to terms on a price was similar to other transactions. Two days prior to entering this dealership, some 60 miles from my base of operation, I called to first reconfirm that the specific car I found on line was actually on site available for sale, and to confirm that this New England dealership could handle the process of transferring the registration of the Florida plates. I spoke to the sales rep who answered the phone, held me on the line and then confirmed all the above.


Two days later, as I was preparing to visit the dealer, I called again with the same questions. A different sales rep held me on the line, and responded “yes”, as the first rep was not at the dealership at the time. When I arrived at the dealership, I asked for a specific sales rep that I found on the dealer web site as “good” to deal with. Unfortunately he was not available and I was redirected to the person that answered the phone earlier in the day, after I found that the first rep from two days earlier was also not available. This rep brought the car around and we did a test drive. There were some discrepancies with the on line site list of options. While this is a dealership mistake these were not deal breakers, however during this process our rep (been with the firm for one month) obtained help from a more experienced sales person (who I later found out described himself as a sales manager)., who took control of the discussion. Now I had two dealer people in the discussion, and we arrived at a deal.


Understanding the process needed for Florida plate transfer was a research and time consuming project on the part of the sales organization personnel. A mistake!! However, it appeared that no one knew how to get it done.  The result, after hours of research, was that I walked out on the sale.


The above occurred on a Friday, over 60 miles from my base of operation. Over the weekend, our own time and research made a solution visible. On Monday, the sales manager’s manager I called determined that the car was still available and the previously agreed deal could still be accomplished.


After making the 60 mile trip once again, the two of the sales people who made the deal said they were trying to find a phone number to reach me over the weekend. They made the mistake of not obtaining it from me earlier, they had my address only. It did not seem they had anything new to add, however. I brought copies of all the needed forms and a list of contacts, I had already confirmed.


The novice sales person and I spent hours filling out the forms and reconfirming the data and contacts. He took notes on pieces of scrape paper found lying around on a shared desk. He turned this information over to a sales administrative desk where two people created on line seller forms, reflecting incorrect information through three cycles to get it right, due to the difference in transferring Florida plates in place of registering in their home state. They only understood one way to do things, yet another set of mistakes on the part of the selling organization. I finally had to tell them how to fill out their own forms, which they did.


The sales people are compensated with a flat fee (no matter the price of the car) going to the initial sales person. In this case the fee was split 50/50 with the novice and the person that took my first phone call and provided the information I needed.


The corrected documents were forwarded to a busy finance person. After a very long wait, the novice sales person under pressure from me, attempted to move the file to another finance person. After a quick review this finance person gave the file back to the first finance person. Another set of dealer mistakes here.


 The overworked finance person, finally presented me with yet another set of documents that substantially altered the price, based on a set of administrative tasks she said no one else understood. She said she had a process to deal with our issue, that was not known by anyone in the sales organization, and was different then the one I was promoting.  More mistakes here.


Her process added about 30% to my costs. When I explained the time and effort a group of people, including myself, put in to the process, I was now promoting, she initially refused to deal with it. Yet another mistake! She asked me to leave her office so she could deal with other customers. Another Mistake! I refused! Escalating to her manager produced an agreement to go my way which was simpler, faster, less costly and all the forms were completed.


When the finance person finally prepared he needed documents, and forwarded them for processing, one of the major seller documents was incomplete, and had to be redone and resent. The fee I had paid the dealer to pay the Boca firm, did not get paid. More mistakes!!! And more time before I could drive the car off the lot, even though I paid for it. This added delay caused a five additional day delay (due to a holiday weekend) before I could drive the car off the lot. Ridiculous!!


On the day the documents arrived at the dealer, the novice called to tell me so (a day after I told him it was being overnighted to the dealer. While the novice told me he worked until 8 PM that day, I arrived at about 5 PM as I told him I would. Not only was he not around, but the sales manager was gone as well. The car was delivered without floor mats, only one key and a stolen previously mounted (when I paid for the car) EZ pass transponder. Mistakes, Mistakes and more mistakes!


One needs to ask why anyone would conduct business with this seller again or recommend anyone do so? Without changes, this dealership is not maximizing profit potential, losing potential references and customers, and is likely to fail.


How many mistakes did you see (not just those I mentioned)? How many similar mistakes are being made in your business?



Steve Koenig, SCORE Counselor




What To Do If You Cannot Pay Your Taxes On Time

If you find yourself in a situation where you are unable to pay your tax bill in full on time, the following options will be helpful.


1-File on time and pay as much as you can. File on time to avoid a late filing penalty. Pay as much as you can to reduce interest charges and a late payment penalty. You can pay online, by phone, or by check or money order. Visit for electronic payment options.


2-Get a loan or use a credit card to pay your tax. The interest and fees charged by a bank or credit card company may be less than the IRS interest and penalties. For credit card options, visit


3-Borrow from a family member, friend or co-worker. It is always possible to ask someone you know to lend you the money to pay your tax bill. To protect all parties, have a formal written loan agreement prepared to avoid potential problems in the future.


4-Use the IRS Online Payment Tool. You don't need to wait for the IRS to send you a bill before you ask for a payment plan. You can use the IRS Online Payment Agreement tool at You can even set up a direct debit agreement. With this type of payment plan, you won't have write a check and mail it each month. It also means you won't miss payments that could lead to more penalties and interest charges.


5-File Form 9465, Installment Agreement Request, with your Tax Return. File you tax return on time along with Form 9465 to set up a monthly payment plan with the IRS.




Don't ignore a tax bill. The IRS may take collection action if you ignore your bill. Penalties and interest charges will continue to accrue until your tax bill is paid in full. Contact the IRS right away to talk about your options. If you a suffering a hardship, the IRS will work with you.



This article was written by Donald M. Scherzi, CPA, CFP, LLC

Mike Lupo, SCORE Counselor

Monday, December 5, 2016

Life or Death

I recently came across a business article that hit me square in the face. Among other things it said: Business owners failing to put a few hours a week into education can make the difference between “life and death”.  WOW that can be a rude awakening for many small business owners! How about these subjects: Business Strategy; Planning; Financials; Marketing; Sales; Purchasing; Production; Facilities, Personnel; Capital, Contracting; Presentations: and the list can go on. 


How about you and your business?


Steve Koenig, SCORE Counselor


New Tax Return Due Dates-Effective for 2016 Tax Returns

There are new filing deadlines applicable to tax returns for tax years beginning after December 31, 2015.

For calendar year taxpayers, these new deadlines will be effective for 2016 tax returns that are due in 2017.

Partnerships: The due date for partnerships to file Form 1065, and Schedule K-1 will move from April 15 to March 15 (or the 15th day of the 3rd month after the end of its tax year).

C Corporations: The due date for C Corporations to file Form 1120 will move from March 15 to April 15 (or the 15th day of the 4th month after the end of its tax year).

S Corporations: The due date for S Corporations to file Form 1120S, and Schedule K-1 will remain unchanged (due date will be March 15th, or the 15th day of the 3rd month after the end of its tax year).

Individuals: The due date for Individuals to file Form 1040 and Schedule C will remain unchanged (due date will be April 15th).


An extension of time to file a tax return IS NOT an extension of time to pay any tax due. Failure to pay tax due could result in various IRS penalties and interest charges.

This article was written by Donald M. Scherzi, CPA, CFP, LLC

Mike Lupo, SCORE Counselor

Monday, November 14, 2016

Cybersecurity Awareness

Forewarned is Forearmed:

Florida Small Business News reported on Symantec’s 2016 Internet Security Threat Report (ISTR)

Spear-phishing attacks targeting employees increased by 55 percent in 2015.

Over the last five years, there has been a steady increase in attacks on small businesses. 43 percent of all attacks were targeted at small businesses last year.

Small business owners need to educate their employees on how they can avoid these types of attacks.

A new zero-day vulnerability was discovered.

Zero-day vulnerabilities are security holes in browsers and website plugins that groups exploit before a vendor can be aware of and fix the problem.

The number of zero-day vulnerabilities in 2015 more than doubled, a 125 percent increase from 2014.

There are major security vulnerabilities in three-quarters of popular websites.

Cybercriminals take advantage of vulnerabilities in legitimate websites to infect and scam users. Being wary of security holes while browsing websites—even popular ones—can help your information stay secure.

500 million personal records were stolen or lost.

There were nine mega-breaches in 2015.

Ransomware increased by 35 percent.

In ransomware attacks, hackers usually encrypt stolen data and demand ransom for its release. In 2015 the focus shifted from PCs to smart phones, Mac, and Linux systems. 

Symantec, recommends that companies do not pay ransom when they are attacked because it funds subsequent attacks.

Now you Know!

Steve Koenig, SCORE Counselor


Friday, November 11, 2016

Why ALL Business Owners Must Keep Accurate & Complete Records

As a business owner, there are many reasons your must keep accurate and complete records for your business operations.

1-The IRS Requires Business Owners to Keep Proper Business Records - In order to file timely, accurate, and complete tax returns, the IRS requires all business owners to keep proper business records.

2-Minimize Taxes & Audit Protection - With accurate and complete business records, taxes can be minimized, IRS penalties can be avoided, and the business owner will maximize their chance of success in the event of an IRS Audit.

3-Preparation of Financial Statements - Proper business records let you prepare a complete set of financial statements.           

4-Obtain Financing - Lenders will generally require business owners to provide a complete set of financial statements when applying for a business loan.

4-Monitor Business Operations & Progress - Up to date business records can help a business get started, run efficiently, and grow. Potential problems can be identified early on and opportunities can be taken advantage of.

5-Avoid Potential Legal Issues - Proper business records will help avoid potential problems with both customers and suppliers should a dispute arise.

6-Selling Your Business - Should the time come when you wish to sell your business, buyers will generally want to see prior tax returns and financial statements.


This article was written by Donald M. Scherzi, CPA, CFP, LLC

Mike Lupo, SCORE Counselor


Wednesday, November 9, 2016

Businesses Booming for Women


A recent article in the Sun Sentinel reported that South Florida ranks First in growth of Women-Led Businesses according to an American Express study.


That is good news..


Steve Koenig, SCORE Counselor



Sunday, November 6, 2016

Nondeductable Expenses


Certain business expenses are subject to very specific tax rules (and often to misinformation among taxpayers). Below are a few such expenses and the tax rules that apply.




For work uniforms to be tax deductible, the clothing must not be suitable for personal use outside the workplace. It doesn't matter that the employer requires the employee to wear the clothing while on the job. If the clothing is suitable for personal use outside the workplace, it is a nondeductible personal expense. Examples of deductible work uniforms would be a police uniform, a firefighter's uniform, and a medical professional's doctor and nurse work scrubs since these are not suitable for personal use outside the workplace.


Club Dues:


Membership dues paid to various types of clubs (airline, athletic, country, hotel, social, sporting) are not a tax deductible business expenses in and of themselves. Meals and entertainment expenses incurred at the club are deductible business expenses, provided the various rules for meals and entertainment are met by the business owner.


Business Gifts:


Business gifts to clients, customers, and potential prospects are tax deductible up to a limit of $25 per recipient per year. Any amount in excess of the $25 maximum is a nondeductible business expense.


Fines and Penalties:


Fines and penalties incurred in a business are not tax deductible.


Federal Income Taxes:


Federal Income Taxes are not tax deductible.


Interest on Car Loans:


Interest paid by an “employee” on a car loan is nondeductible personal interest even if the auto is used for business purposes.


A “self-employed taxpayer” may claim the interest paid on the business use portion of a car as a deductible business expense.



This article was written by Donald M. Scherzi, CPA, CFP, LLC

Mike Lupo, SCORE Counselor

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Monday, October 17, 2016

How Long Should You Keep Payroll Records?


At least four years after the due date for employees to file their income tax returns for the particular year, IRS says.


Records to be retained include wages, payment dates, and employee data such as their names, dates of employment, Social Security numbers and addresses.


Also, copies of W-4 Forms, W-2 Statements, I-9 Forms, Payroll Tax Returns, and amounts and dates of tax deposits.


Keeping these records will help you survive a State of Federal Income Tax and Payroll Tax Audit.




If you outsource payroll, be sure the payroll company provides you with copies of all payroll related information each month, including proof of payroll tax deposits made. The business and business owner is the party ultimately responsible for required payroll tax deposits.



This article was written by Donald M. Scherzi, CPA, CFP, LLC

Mike Lupo, SCORE Counselor


Monday, October 10, 2016

Balancing Act

Here is a case where a decision is impacting the business in very visible ways.


When the restaurant started the employees were instructed to “greet and seat” entering customers “ASAP”, providing preference over servicing seated customers. This created waiting lines of employees at the entrance during slack periods, another welcoming sign to customers, and helped build a repeat customer base.


At some point the process shifted to one where seated customers received priority. This resulted in customer “queues” waiting to be seated at one of the many empty tables they could see. The repeat customer base shrank as a result.


How about the balance between reservations and walk-ins?


In the restaurant business, “time is money”. Get them seated, serviced and billed/collected to make room for the next customer.


Where is the balance in your business?


Steve Koenig, SCORE Counselor


Tuesday, October 4, 2016

Depreciation Issues


Depreciation is an annual income tax deduction that allows you to recover the cost or other basis of certain property over the time you use the property in your business.


To be depreciable, the property must meet all of the following requirements:

·It must be property you own.

·It must be used in your trade or business.

·It must have a determinable useful life.

·It must be expected to last more than one year.


Examples include: Automobiles, Buildings, Equipment, Furniture, Fixtures, Intangible Assets, and Structures.


NOTE: Land is never depreciable.


The tax laws require business owners to keep proper records showing the business, investment, and personal use of property. Only the business and investment use is depreciable.


Proper records include:

·Description of the property

·How the property was acquired       

·Property's cost or other basis

·Business and Investment use percentages


Depreciation begins when you place the property in service, meaning when the property is ready and available for its specific business use.


Depreciation ends when you have fully recovered your cost or other basis or you permanently withdraw it from use due to:

·Sale or exchange

·Convert to personal use


·Property is destroyed or scrapped.


The tax laws use various depreciation rules for specific types of property. IRS Publication 946 provides detailed information regarding depreciation issues.



This article was written by Donald M. Scherzi, CPA, CFP, LLC

Mike Lupo, SCORE Counselor


Sunday, October 2, 2016

Special Counselor of the Montrh

We are delighted to shine the spotlight on a distinguished member of our staff who by his or her efforts brings great credit to our organization. This month we are honored to salute:



Wolfgang has been a proud member of our Chapter for 10 years and more. During that time he has served as Vice Chair, Chairman, and District Director. In those varied capacities he hit two home runs. First he dedicated himself to getting our Chapter solidly back on a success track. And his well-thought-out strategy paid off when, in 2013, the Chapter won the National Chapter of the Year award, in competition with 320 chapters nationwide.
With his attention later turned to improving the quality of all 7 Chapters then in his South Florida District, Wolfgang challenged and inspired Chapter leadership with insightful recommendations on every aspect of Chapter management. And it wasn’t long before the District was in the top three in the nation, and 1st in total services, among 69 different districts.
Now, back on our Executive Committee, Wolfgang serves with distinction as a Chapter Vice Chair, member of the Planning Committee, ambassador to the political arena, wise Counselor, and spearhead of the development of an important new area relationship that will provide the Chapter a setting for our Annual Business Conference.
Wolfgang continues to inspire us all with his dedication, clear thinking, and goal-oriented planning. So, take a very well deserved bow, dear friend, as we salute you as our Special Counselor of the Month for October, November, and December 2016.

Monday, September 19, 2016

BEST Tech company to work for

Fortune magazine and Great Places to Work Institute have rated a SE Florida company, Ultimate Software of Weston, the Top Tech Workplace in the USA. They have over 1100 employees. Their benefits include: 100% health care coverage; 40% match 401K; Paternity/adoption leave; 2 paid volunteer service days.

How do your employees feel about working for you?

Steve Koenig, SCORE Counselor


Sunday, September 11, 2016

Standard Mileage Rate Method for Business use of a Vehicle

Choosing the Standard Mileage Rate Method

For a vehicle you own, you must choose to use it in the FIRST YEAR the vehicle is available for use in your business.

For a leased auto, the standard mileage rate method must be use for the ENTIRE lease term.

You must make the choice to use the standard mileage rate method by the due date (including extensions) of your return.

You can elect to use the standard mileage rate method if you used a car for hire (unless the standard mileage rate method is otherwise not allowed).

If you use the standard mileage rate method, you cannot deduct your actual vehicle expenses for that year.

Standard Mileage Rate Method NOT Allowed

You cannot use the standard mileage rate method if you:

·Use 5 or more cars at the same time.

·Claimed a Section #179 deduction on the car.

·Claimed the Special Depreciation Allowance on the car.

Interest Expense on an Auto Loan

If you are an employee, you cannot deduct any interest paid on a car loan. This applies even if you use the car 100% for business as an employee.

If you are self-employed and use your car in your business, you can deduct that part of the interest expense that represents your business use of the car.

Personal Property Taxes

If you itemize your deductions on Schedule A (Form 1040), you can deduct state and local personal property taxes on automobiles. You can take this deduction even if you use the standard mileage rate method or if you do not use your car for business.

If you are self-employed and use your car in your business, you can deduct the business portion of state and local personal property taxes on Schedule C (Form 1040). If you itemize your deductions, you can include the remainder of your state and local personal property taxes on the car on Schedule A (Form 1040).

Parking Fees and Road Tolls

You can deduct any business-related parking fees and tolls in addition to using the standard mileage rate.

Standard Mileage Rate Method Calculation

To figure your auto deduction under the standard mileage rate method, you must keep an accurate and complete record of your business use of your vehicle.

You deduction is calculated by multiplying the total number of business miles for the year by the IRS allowed rate per mile (which the IRS usually adjusts each year).


This article was written by  Donald M. Scherzi, CPA, CFP, LLC
Mike Lupo, SCORE Counselor


Tuesday, September 6, 2016

Florida is No. 1

In case you missed it, according to a WalletHub survey Florida is No. 1 for Retirement! The survey looked around the country and weighted cost of living, taxes, population age, museums and theaters, golf courses, volunteer opportunities, crime, drinking water quality, life expectancy, Doctors/Dentists, Healthcare.

Is your business taking advantage of this?

Steve Koenig, SCORE Counselor


Thursday, September 1, 2016

Choose Your Tax Preparer Wisely

If you pay someone to prepare your tax return, the IRS asks you to choose your tax return preparer wisely-for good reason. You are responsible for the information on your income tax return. That's tru no matter who prepares your tax return.

Here are some tips to keep in mind when choosing a tax preparer.

Check the Preparer's Qualifications

Use the IRS Directory of Federal Tax Return Preparers with Credentials and Select Qualifications.

This tool can help you find a tax return preparer with the qualifications you prefer.

Check the Preparer's History

Check for disciplinary actions and license status foe credentialed preparers. For CPA's check with the State Board of Accountancy. For Enrolled Agents, go to and search for “verify enrolled agent status. For Attorneys, check with the State Bar Association.

Ask about Fees

Ask about fees in advance.

Avoid preparers who base fees on a percentage of their client's refund amount.

Avoid preparers who boast bigger refunds than their competition.

Make sure your refund goes directly to you-not into your preparers bank account.

Ask to E-File Your Return

Most tax preparers offer E-file-for free. Check to see if a fee applies.

Paid preparers who do taxes for more than 10 paid clients generally must file electronically-unless you specifically inform the preparer you do not want to e-file your tax return.

Review Your Tax Return Before Signing and Filing

Before you sign and file your tax return, review it for both accuracy and completeness. Remember, you are ultimately responsible for what is and is not reported on your tax return

Never Sign a Blank Tax Return

Never use a tax preparer who asks you to sign and date a blank tax form.

Ensure the Preparer Signs and Includes Their PTIN

All paid tax preparers must have a proper Preparer Tax Identification Number, or PTIN.

By law, paid preparers must sign returns and include their PTIN.

Copy of Tax Return and Records

Be sure your tax preparer provides you with a copy of your completed tax return that was filed and returns all tax records used to prepare your tax return to you.

Make Sure Your Preparer is Available

Avoid fly-by-night preparers.

Make sure your preparer is available whenever you have a question or need assistance throughout the year.

Choose the Right Preparer for Your Specific Tax Needs

All taxpayers are not alike.

Not all tax preparers are alike.

Be sure to choose a preparer who is knowledgeable and experienced for your specific tax needs.

Inquire about their education and ongoing training.

Report Abusive Tax Preparers to the IRS

You can and should report abusive tax preparers and suspected tax fraud to the IRS using Form 14157.

If you suspect your preparer filed or changed your return without your consent, file Form 14157-A.

These forms are available on


·Creating or omitting income to generate a larger refund

·Creating false exemptions, dependents, and tax credits to generate a larger refund.

·Creating false and or inflated expenses to generate a larger refund.

·Using an incorrect filing status to generate a larger refund.

·Altering you tax return documents.

·Filing a return without your consent.


This article was written by  Donald M. Scherzi, CPA, CFP, LLC 
Mike Lupo, SCORE Counsel

Thursday, August 11, 2016

Factors you must prove to document & substantiate business expenditures

The tax law requires All business owners to keep accurate and complete business records that clearly reflect income and expenses. The tax law also requires specific records be kept that document and substantiate various expenses reported on the tax return.

Failure to comply with the tax law could result in the IRS disallowing the deduction and also subject the taxpayer to additional taxes, various penalties, and interest charges.

Below are some record keeping rules all business owners should  follow for various expenses that are often high audit targets.

Automobile Records (Appointment Book, Calendar, Automobile Use Log etc.)

            Date-Date of each business use of the vehicle.

            Place-Destination by name of state, city or town.

            Total Mileage-Total mileage broken down into business mileage & non-business mileage.

            Business Purpose-Business reason or nature of business benefit derived or expected to be derived.

            Business Relationship-Occupations or other information about persons visited such as, name, title, & organization which establishes the business relationship.      

Business Gifts

            Date-Date of each gift.

            Amount-Total cost of gift.

            Description-Description of gift item.

            Business Purpose-Business reason or nature of business benefit derived or expected to be derived.

            Business Relationship-Occupation or or other information about recipient, such as name, title, & organization which establishes the business relationship.

            (Note: The tax deduction allowed for business gifts is limited to $25 per recipient per year)

Entertainment & Meals

            Date-Date of each entertainment & meal or use of qualifying facility.

            Place-Name and address of place of entertainment/meal.

            Amount-Total amount of each expenditure.

            Business Purpose-Business reason or nature of business benefit derived or expected to be derived, and, the nature of business discussed.

            Business Relationship-Occupations or other information about persons entertained such as, name, title, & organization which establishes the business relationship.

            (Note: The tax deduction allowed for entertainment & meals is limited to 50% of the total allowed expenditure). (Other deduction limitations also apply to certain entertainment).

Travel Away From Home Overnight

            Date-Dates of departure and return and number of days attributable to business activities.

            Place-Destination by name of state, city, or town, (or foreign country, if applicable)

            Amount-Amount of each separate expenditure for travel, local transportation, lodging, entertainment, meals, and other incidental expenses.

            Business Purpose-Business reason for travel or nature of business benefit derived or expected to    be derived.           

            Business Relationship-Occupations or other information about persons visited such as,name, title, & organization which establishes the business relationship.

Casual & Contract Labor

            Each year, every independent contractor MUST provide a completed Form W-9 Request For Taxpayer ID Number

            Contractor's bill/invoice detailing date work was performed and a description of work completed on each project.

            Proof of payment (canceled check, credit card statement)

            Form 1099-Miscellaneous Income to the contractor

            NOTE: Even though you may not be required to issue a Form 1099, doing so will document and substantiate you business expense

CLIENT COSTS INCURRED: Are either reimbursed or not reimbursed.

Client Costs ARE Reimbursed. (Reimbursed Expenses ARE Taxable Income)

            Date-Date expense was incurred

            Description- Description of expense incurred

            Amount-Amount of each expense

            Amount-Amount of each reimbursement

            Business Purpose-Business reason or nature of business benefit derived or expected to be derived, and, the nature of business discussed.

            Business Relationship-Name and business relationship of the party for whom the expense was paid for.  

Client Costs ARE NOT Reimbursed. (Client cost is a Deductible ordinary & necessary business expense)

            Date-Date expense was incurred

            Description- Description of expense incurred

            Amount-Amount of each expense

            Business Purpose-Business reason or nature of business benefit derived or expected to be derived, and, the nature of business discussed.

            Business Relationship-Name and business relationship of the party for whom the expense was paid for.  

Supporting Documents AND Proof of Payment   

Bank Statements

Credit Card Statements

Canceled Check

Electronic Funds Transfer Confirmation

Vendor Invoices & Receipts/Work Orders/Purchase Requests


Expense Record Logs


Employees & Independent Contractors

If you hire employees, you MUST do the following-failure to do so could result in substantial penalties and interest charges.

1-Have every employee provide you with a completed Form I-9 (Employment Eligibility Verification)

2-Have every employee provide you with a completed Form W-4 (Employee Withholding Allowance Certificate) (this should also be updated every year with each employee)

If you hire independent contractors, you MUST do the following:

1-Have every independent contractor provide you with a completed Form W-9 (Request for Taxpayer Identification Number).

2-Give every independent contractor a Form 1099-Miscellaneous Income at the end of the year.

            (even if an independent contractor is not required to be issued a Form 1099 Miscellaneous Income Statement, by doing so you will protect yourself if you are ever audited and the IRS requests documentation and substantiation of your deduction for this expense).

This article was written by  Donald M. Scherzi, CPA, CFP, LLC 
Mike Lupo, SCORE Counsel