The IRS has fairly straightforward rules to what meals can be deducted. The simplest rule is that four people must be present and business must be discussed. There are exceptions. You can't just deduct lunch, you would have to be 'away from the office' and could only deduct reasonable expenses. You couldn't buy lunch every day at Mortons or Ruth's Chris and easily deduct it. You can't easily count your daily lunches as expenses.

Reimbursing for mileage becomes tenuous if you work from home. Since you can't count commuting and you have no office, the mileage from your home office to your sales appointment isn't deductible. There are people that work around this by getting a PO Box that they 'check' before they go to a client meeting. A stop at the PO Box or ATM to check their balance becomes a business task. They can't deduct the mileage from their home to the PO Box/ATM, but they can deduct the mileage from the PO Box to the appointment.

Expenses on a business are taken directly against profits - to a degree. If you use a laptop 100% for business, you can deduct that (up to the Section 179 deduction cap) before having to use a depreciation table - typically MACRS5 which is unusually harsh in the tech world. If I had a nickel for the amount of equipment that survived beyond the depreciation table, I'd probably have 30 cents. If you buy that with your personal cash, you are paying for it with post-tax money rather than pre-tax money.

Health Insurance becomes another tricky situation. If you pay for it with the company, it becomes a taxable benefit, but, if you have employees in Florida, offering it to myself as an executive perk means I need to offer it to all employees, and pay 50% of their insurance.

These are brief overviews and an accountant would be the person to ask about what you can deduct and what he's willing to defend if you get audited.

There isn't really that much in terms of accounting to run a business. You get a credit card that you use exclusively for business expenses, and a separate checking account. Income from ventures goes into the checking account, bills for the expenses are paid from that, you pay yourself a monthly stipend. Whether you do a Sole Proprietorship, LLC or S-Corp, your income flows through to your personal tax return. A C Corp is subject to corporate tax, then, when you pay yourself you are taxed again on that money. That is the double taxation that everyone talks about, and, in certain rare situations, can reduce your tax bill. You also need to make sure that the business meets certain criteria and doesn't get treated as a hobby. You can't have dozens of money losing years, taking tax breaks and deductions all the time without the IRS getting suspicious. You can however win that case if you can prove through recordkeeping that you were indeed trying to make a profit, long incubation time, professional bookkeeping/recordkeeping, etc.

As for which company structure you choose, talk with an accountant.

Now, there are reasons to have a company structure rather than just getting 1099s. Two words, well, a word and an acronym: Simple IRA (or a SEP IRA depending on the company's size). Have excess cash? Rather than mucking with the paltry Roth or Traditional IRA, the Simple IRA allows you to put a lot more cash into a retirement fund. Pretax money with a company match that isn't taxed until it is withdrawn when you reach retirement age. Until you get more than 100 employees, this is one of the huge benefits. I believe your 2011 contribution can be up to $11500 with the company kicking in a 3% match of your compensation, not your contribution (i.e. earn $60k/year, you toss $11.5k of your pre-tax income, and the company kicks in an $1800 contribution). There are exceptions depending on age, coverage under other plans, but, it's almost as good as the investment sheltering provided to teachers - though, with their pay scale, very few teachers can really take advantage of the opportunity.

There are always ways around it and it depends on how far you're willing to bend the rules, and, if you bend it far enough to get an audit, whether you're still willing to keep bending.

There was a dialog in 'The Firm' that sums up how things work fairly succinctly. Tom Cruise was pitching the Sonny their tax planning pitch and it went something like:

Mr. Tolar handed you a schedule that virtually guarantees you zero tax with zero risk. [...] You defer your tax in full, even though you have a bankable LP.

Deferred till when?

What do you care, whenever it is, it is still the best interest free loan you'll ever get.

I have met people that will push, bend, and break the law because the penalty when/if they get caught is less than the income they made by using that money to make money.

It isn't something I would do or advocate, but, make sure your accountant is willing to walk up the steps with you to the IRS courthouse if you decide to travel willingly up that path.

In short, get an accountant (probably after April 15) and raise your issues. Tax planning is a very good strategy to have under control.

Added: forgot the reference to the home office deduction.

If you have a home office, it needs to be a space dedicated 100% to the business. It needs to fit the 'archway rule' which means it needs a door or archway that makes it a separate room. It can't be a room that you travel through to get somewhere else, i.e. living room, etc. You can then deduct a percentage of your expenses, electric, water, gas, etc based on the ratio of the square footage of the home office to your entire home. Now, here's the fun part. When you sell the home, if your house appreciated, a percentage of that is considered capital appreciation for the business.