How Important is it To Log Business Miles?

Are you a business owner? If so, are you logging your business miles? It is important to keep track of your business miles so you can save tax dollars and get the deduction for the miles put on your vehicle.

It is required by the IRS that you keep adequate records when you log your mileage. 

2012 Business Mileage Rates

• 55.5 cents per mile for business miles driven
• 23 cents per mile driven for medical or moving purposes
• 14 cents per mile driven in service of charitable organizations
  

Be sure you use the standard mileage rate for the year of your tax return, not the year you are working on your return.

To determine the amount of miles driven for business you need two numbers for each business vehicle:

1)    The total number of miles driven throughout the year

2)    The total number of miles driven only for business

Tracking your mileage:

·     Tracking your total mileage for the year is easy. Simply write down the mileage on your odometer on the day that you start using a vehicle for business and on the day the year ends.

·      Keep a notebook in your vehicle that you can easily access to record your mileage on each day.

·      If you’re using a vehicle for personal and business it is important to write down the mileage to and from the location that is business related. Be sure you include the purpose for the trip or errand.

·     Business miles are the number of miles actually driven for business, for example, to meet with a client.

·      Remember that any miles driven to the bank, to purchase supplies, computer store, or to meet with your accountant are also part of your mileage deduction.

It is important to remember that commuting is NOT deductible, but it is required on your tax return.

Keeping track of your business mileage is not that difficult. As time progresses it will become second nature to log your mileage. Professor Tax USA wants to help you get all the deductions you deserve. If you have any tax, bookkeeping or accounting questions, remember we are always here to help make running your business much easier. 

Understanding "Cost of Goods Sold"

As a  small business owner, are you confused about what “Cost of Goods Sold” really means? Often the tax lingo is confusing and sometimes people fail to read the fine print and then skip that section on their taxes. You could be missing out on some great money.

Definition of “Cost of Goods Sold – COGS”

Investopedia states: The direct costs attributable to the production of the goods sold by a company. This amount includes the cost of the materials used in creating the good along with the direct labor costs used to produce the good. It excludes indirect expenses such as distribution costs and sales force costs. COGS appears on the income statement and can be deducted from revenue to calculate a company's gross margin. Also referred to as "cost of sales".

Basically, think about what you are spending on what you sell.

Cost of goods sold is the direct cost of the items sold.

When a business purchases its inventory, the inventory is an asset until it is sold.

For example, the COGS for an automaker would include the material costs for the parts that go into making the car along with the labor costs used to put the car together. The cost of sending the cars to dealerships and the cost of the labor used to sell the car would be omitted.

How to Calculate Cost of Goods Sold:

According to irs.gov:

·      Beginning inventory is the cost of merchandise on hand at the beginning of the year that is available for sale to customers. A manufacturer or producer should include the total cost of raw materials, work in process, finished goods and materials and supplies used in manufacturing the goods as part of the beginning inventory amount.

·     The inventory at the end of the year is also known as closing or ending inventory. The ending inventory will usually become the beginning inventory for the next tax year.

Here at Professor Tax USA you can always count on us to provide you with the information and service needed to help your business run smoothly. For a free consultation feel free to contact Professor Tax. To learn more about tax laws, visit our blog, NewYear, New Tax Laws.

Alamo-Rosa Service Center Gets an Angel

Alamo-Rosa Service Center is an Auto and Truck Service Center located in Alamogordo, New Mexico. They have been in business for 25 years and are family owned and operated. They are ASE certified, provide value and quality service for all your automotive needs. No job is too big or too small!

Some of the Services offered are:

• Automotive, Truck and R.V. Tuning and Servicing
• Overhauls
• Computer Diagnostics
• Tire Repair and Replacement
• 24 Hour Call out and Roadside Assistance 

Alamo-Rosa Service Center have been loyal clients of Professor Tax USA since 2010.  Mrs. Dori is very pleased with the services she has received from Professor Tax. They are always a phone call away and available for bookkeeping, tax and accounting questions. Henry meets with Dori every 2 months and his son, Daryl comes out in between for one to one consultations.
Dori began praying for an accountant to come her way and one day she answered the phone and it was Henry. "He was an answer to my prayers" "says Dori. The most important benefit that Alamo-Rosa has gotten from Professor Tax is, "how knowledgeable he is of the tax laws. He put things in simple terms in order to help us run the business more effectively," states Dori.

Dori describes the service she receives from Professor Tax as, "From the Heart." " He offers heartfelt service, it's not just business."

"I wish I had him my whole business life," states Dori. "If you meet Henry you will want to work with him."

Professor Tax travels all over this great nation to meet face to face with the businesses that he serves. As a small business owner, you often go to bed with enough on your mind, don't let accounting and taxes be a burden to you.  With our unlimited consultation services, your questions are answered when you need answers and this service is, as always, at no charge for our clients. If your in need of an accountant, have a bookkeeping questions, need payroll help, or have a tax question ... Professor Tax will gladly travel to you. Take advantage of your chance to sit face to face and meet the Professor. Call for your complementary consultation meeting... 850-914-0054.

New Year, New Tax Laws

If you are like most small business owners the New Year means that you are beginning preparation for filing your taxes. By February 29^th W-2’s and 1099’s are due to the government, corporate taxes are due by March 15^th and then you have your personal returns due in by that, oh so famous, Tax Day, April 15^th. Here at Professor Tax we wanted to share with you some of the changes for the upcoming 2012 Tax Season. 

1)    Extended - Lower Capital Gains and Dividend Tax Rates

There has been an extension through 2012 on the Capital Gains and Dividend Tax, which starts at 5% and goes to a maximum of 15%. If you purchase an item and sell in less than a year you may end up paying more in taxes. But thanks to this extension if you keep it for more than a year, (1 year and 1 day or more) then sell the item you will not have to pay as much in taxes. So before you sell an item that you have purchased in the last year consider the fact that you can make money and pay fewer taxes if you keep your purchase for more than 1 year. 

2)    Extended - Section 179 Expense Deduction

Another extension, Section 179 Expenses Deduction, will benefit companies who are making new purchases for their business. This tax break encourages small business to grow their business without the burden of heavy taxes. Generally, the expense deduction is $500,000 for section 179 properly placed in service in 2011.

3)    Extended - Payroll Tax Credit

The Payroll Tax Credit, also known as the Payroll Tax Holiday has been extended until February 29^th 2012. This brings the social security tax withholding down from 6.2% to 4.2%, but remember this is only temporary.  

4)    Increased  - Earned Income Tax Credit (EITC)

That’s right “increased” not “extended” through the end of 2012. If you have 3 or more children you can get a temporary increase in your earned income tax credit. 

5)    Missing  - Schedule M on the 1040

Yep, you heard correctly, missing.  “Making Work Pay”, also known as Schedule M located on Form 1040 is no longer available.  Previously, you gained a credit of $800 for married couples and $400 for singles. So when filing your personal returns this year, remember, you can no longer receive this tax credit.

It’s no surprise that there were no major changes to the tax laws in 2012 being as it is an election year, neither republicans or democrats wanted to be responsible for increasing taxes. So take advantage of the Section 179 Expense deduction on things you have already purchased or need to purchase for your company. Remember to look at how long you have owned an item before reselling … it just may pay for you to wait till that 1 year and 1 day mark!

As a small business owner you have many roles and responsibilities and often a lot of employees that depend on you. At, Professor Tax, we understand how important it is to have an accountant that understands your small business. We want to continue to provide bookkeeping and accounting tips for you. Please let us know if you have a question about bookkeeping, accounting or taxes. 

The Professor travels to see all of his clients face to face!  If you live in the continental United States and would like a free, no obligation chance to meet and review your bookkeeping with the Professor, contact us.