Understanding The Miscellaneous Category

By July 20, 2020 July 22nd, 2020 Blog, Profit First

Today I wanted to help you understand the miscellaneous category, so that you don’t land yourself in hot water with the bullies at the IRS.

 

There is a weird category we see a lot from our clients that I wanted to go over with you today.

 

First, I want you to think about your ledger from the eyes of an IRS auditor… If your company is ever audited, the auditor is going to want to go over your profit and loss statement or they are going to look at what is labeled as “expenses” on your tax return.

 

If they see anything on your statements that is marked as “other”, or even worse “miscellaneous”, what they are going to think is “They are claiming this is a business expense but they can’t even tell me what category it should go into? I don’t think so.”

 

From there, they are going to go over those expenses with a fine tooth comb and find ANY reason they can not to allow those deductions. (Trust me, they take great pleasure in finding things to say no to…)

 

It’s for that reason, we recommend avoiding this category completely. If you need a catch-all category, a better one is “office expenses”, but the BEST IDEA would be to create new specific categories for those expenses.

 

Now, I am not saying have 100 different categories, that is way too much. Just avoid using other or miscellaneous or anything that looks like you just lumped a bunch of things together.

The IRS will have a field day with that, save yourself the headache!

 

CLICK BELOW TO WATCH THIS FULL PROFIT FIRST TIP VIDEO

 

You can watch ALL of our Profit First Tip videos by SUBSCRIBING to our YouTube Channel. We post new videos Weekly!

 

More of a blog person?… THAT’S OK! We keep our INCITE TAX BLOG full of all of the same amazing content that you would find on our YouTube Channel, including John’s special guest interviews, such as the one with the founder of the Profit First System, Mike Michalowicz!

 

Don’t forget to order YOUR copy of Profit First For Microgyms, now available on AMAZON!

 

 

Follow us on…

Facebook

LinkedIn

Instagram

Twitter

Leave a Reply