|
|
|
5 Tips For Better Management Of Home Business
Home business on the net offers an opportunity to earn a lot of money. But like any other business it demands a constant input.
A better execution of efforts would bring better results.
Inculcating a professional approach and attitude...
How To Write A Killer Press Release
One of the primary tools still used by PR professionals to garner media coverage is the press release. Now understand the purpose of a press release is to grab the attention of an editor, not to offer a word for word story to a publication. Most...
Managers, Got a Grip on Your PR?
What are you trying to do with your business, non-profit or association public relations program? Get a little publicity for a service or product? Or, perhaps, you’re doing what you really should do, persuade your key external stakeholders to...
Top 10 Reasons to Become an Affiliate Marketer
Back when my online business consisted ONLY of affiliate
sites, I had no need for a personal assistant.
The sites were all in place, and my affiliated merchants
handled everything related to orders.
Last week, one of my clients...
What are the benefits of blogging for small business?
Copyright 2005 UpLevel Strategies Blogging has become quite popular for small businesses as of late. I have noticed on PR Leads that there are several story requests for experts to talk about the benefits of blogging for small businesses. So, I...
|
|
| |
|
|
|
|
|
|
Small Business Tax Deduction - Write-Off Bad Debts
Practically every small business has receivables that it cannot obtain from clients. If your small business doesn't have any such receivables, consider yourself lucky. For those small businesses that suffer from uncollected receivables, solace can be taken from the fact you can claim a tax deduction.
Bad Debt Tax Deduction
A small business can write-off bad debt losses if it meets nominal requirements. To claim such a tax deduction, the following must be shown:
A. The existence of a legal relationship between the small business and debtor;
B. The receivables are worthless; and
C. The small business suffered an actual loss.
Proving there is a legal relationship between the small business and debtor is fairly simple. You must simply show that the debtor has a legal obligation to make a payment. Most businesses issue invoices or sign contracts with debtors and these documents suffice to prove the legal relationship. If you are not putting your business relationships in writing, you should begin doing so immediately.
Proving receivables are worthless is slightly more complex. A small business is required to show that the debt has become both worthless and will remain so. You must also show that you took reasonable steps to collect the receivables, but you are not necessarily required to go to court to meet this requirement. A clear example where
you would meet this requirement is if the debtor filed bankruptcy.
While proving that you suffered a loss may sound like the easiest requirement to meet, the issue is a bit more complicated. The Tax Code defines the loss as an amount that is included in your books as income, but is never collected. A classic example of such a situation would be a manufacturer that provides products to retailers on credit. The manufacturer can show a real loss if the retailer files bankruptcy. Unfortunately, there is almost no way to claim a loss if you provide hourly services and use a cash accounting method. The IRS does not consider the expenditure of time and effort to be a sustained economic loss.
Small businesses suffer all to often from uncollected receivables. If you failed to claim such losses as a tax deduction during your last three tax filing years, you should file amended tax returns to get a refund.
About the Author: Richard Chapo is CEO of http://www.businesstaxrecovery.com - Obtaining tax refunds for small businesses by finding overlooked tax deductions and credits through a free tax return review.
Source: www.isnare.com
|
|
|
|
|
|