Understanding your business finances isn’t scary – it’s empowering! Jon Frye, CPA, joins this episode to tackle a topic that may not be the most exciting to some, but personally hits home for Jennifer. She recaps her experience being audited in 2018, giving insight into why she was audited and how she came out unscathed. Jon shares advice on avoiding IRS audits and understanding the nuances of tax preparation. He also gives details on what constitutes legitimate business expenses, such as travel upgrades and tips, and emphasizes the low risk of audits for smaller inconsistencies.

Learn how to take control of your business finances, avoid risks, and make informed decisions. At the end of the day, good financial practices aren’t about doing everything perfectly. It’s about understanding, planning, and preparing!

Understanding Your Business Finances: Empowerment Over Fear

Financial management might not seem like the most thrilling aspect of running your business, but it’s essential. This episode starts by shedding light on the importance of understanding your business finances, not just for compliance but also for empowerment. Jennifer shares her personal experience of being audited in 2018, which underscores the significance of being prepared and knowledgeable about your financial dealings. The key takeaway here is that understanding your finances isn’t about being perfect; it’s about planning, preparing, and making informed decisions to steer clear of unwanted surprises.

Avoiding IRS Audits: Key Documentation and Practices

Jon Frye, a seasoned CPA, emphasizes the importance of having a solid understanding of tax documentation to avoid audits. He breaks down the types of forms that can often cause confusion, such as 1099s, K1s, and contractor payments. Jon highlights the importance of accurate record-keeping and filing, especially regarding these documents, to avoid triggering an audit. A crucial point he makes is that smaller inconsistencies often don’t lead to audits, but it’s still vital to maintain accuracy and honesty in all financial reports.

Business Expenses and Deductions: What Really Counts

One of the most valuable parts of the discussion is around business expenses and deductions. Jon explains what constitutes legitimate business expenses and how to justify them properly. For example, travel upgrades, tips, coffee, and meals can be deductible, but only when they meet specific criteria. He also touches on bonus depreciation and how it can be beneficial for your business. The message is clear: you need to know what you can deduct and how to document these deductions to stay on the right side of the law.

Preparing for Tax Season: Tools and Strategies

Tax season can be daunting, but Jon provides insights into making it manageable. He recommends using tools like QuickBooks to keep your finances in order throughout the year. By staying organized and proactive, you can avoid the last-minute scramble and ensure everything is in place when it’s time to file your taxes. Jon’s advice here is invaluable for avoiding common pitfalls that lead to errors or missed deductions, which could potentially flag your return for an audit.

Long-Term Financial Health: Managing Expenses and Staying Compliant

The episode wraps up with a discussion on long-term strategies for maintaining your business’s financial health. Jon encourages you to regularly review and manage your business expenses, not just during tax season but throughout the year. He also highlights the importance of ongoing education in tax prep strategies to avoid underpayment consequences and ensure compliance. The overarching theme is that good financial practices are about understanding, planning, and continual learning—tools that will help you avoid audits and keep your business on a solid financial footing.

Want to hear more? Tune into episode 90 of Tique Talks!

Disclaimer: The information provided in this podcast and blog post is for general informational purposes only and does not constitute legal or financial advice. While the topics discussed offer valuable insights, you should consult with a qualified legal or financial professional before making any decisions related to your specific situation. Neither the host, guest, nor the producers of this content are responsible for any actions taken based on the information provided.