A first step in avoiding costly hassles with the IRS is identifying potential problem areas. As a recent government report confirmed, one frequent source of audit conflict between the IRS and small businesses is the documentation of travel and entertainment expenses. The IRS often has the edge in these fights and wins because the tax law spells out detailed rules about how these expenses must be verified and documented.
Most companies try to comply but often fall short, and end up drowning in paperwork.
Fortunately, that's one problem for which some relief has arrived. No receipt, no deduction. Although this is a big break, it doesn't mean that all recordkeeping can be ignored. Setting up separate procedures for your own internal tracking of expenses probably makes sense, too. Please call if you have any questions on the new rules or would like us to review and update your travel and entertainment recordkeeping procedures.