Tech Park Academy: Tax Change and What Entrepreneurs Need to Know

This post by Stephen Loy originally appeared on the Louisiana Technology Park blog.

A constantly changing landscape of complex tax regulation means entrepreneurs need to stay informed as they seek to reduce their tax liability, budget more carefully and plan for the future.

In a recent Tech Park Academy session at the Louisiana Technology Park, Brandon Lagarde, a director in the Postlethwaite & Netterville Tax Services Group, updated a group of entrepreneurs on some of the many legislative changes to the tax code and some case law topics that could affect many business owners.

Read on for a few of the key takeaways from his presentation.

Timely Documentation Is Essential

Do you keep a log of all your mileage and update it frequently? Do you use a computer for only work-related items and never for personal reasons? Can you prove that all business expenses were incurred, substantiate the exact amounts and show evidence that they were legitimate business expenses?

If the answer to any of these questions is “no,” it might be helpful to evaluate your record-keeping process and determine how you would prove these things in a tax audit. Lagarde shared a few examples from tax court cases in recent years, including a CPA who attempted to substantiate his mileage deduction by using MapQuest and a meeting log. His deduction was denied on the grounds that he failed to maintain contemporaneous records. A deduction for his laptop was also not allowed, as he was unable to substantiate the proportion of business use to personal use.

In another case, Lagarde said, a business owner was allowed to deduct only a fraction of what he claimed for his cost of goods sold because he couldn’t substantiate the exact amount. The lesson is to maintain appropriate documentation as you go, so you don’t have to estimate amounts later — leading to a situation where a court decides what amount, if any, should be allowed.

Read More>>>>>>