| Are you wondering whether you are deducting all | | | | bank statement and then record those bank |
| the expenses the law allows for your sole | | | | charges in your bookkeeping software program |
| proprietorship? Here are three commonly | | | | or manual record keeping system. It's easy to |
| overlooked deductions that begin with the letter | | | | overlook these charges because you didn't write |
| "B". | | | | a check or use your credit card to incur them. |
| 1. Bad Debts. | | | | The same thing applies to merchant credit card |
| If you use the Accrual Method of bookkeeping, | | | | fees. If you accept credit card payments from |
| you record income from a sale when you invoice | | | | customers, fees are probably assessed to your |
| the customer, regardless of when or even | | | | bank account every month and these fees are |
| whether they pay you. So what happens if they | | | | automatically deducted from your bank balance. |
| don't pay you? Let's say that several months | | | | Be sure to record those charges, too, or you'll |
| have passed and you keep sending them | | | | miss out on a bona fide tax deduction. |
| statements that continue to be ignored. By the | | | | 3. Books, Magazines, Trade Journals. |
| end of the year, if you've done all you can do to | | | | Any book you purchase for business use is a |
| collect the payment without success, you can | | | | legitimate tax deduction. Be careful here not to |
| take a deduction for the uncollectible amount. This | | | | limit this deduction to only those books that deal |
| is known as a "bad debt" and you should write it | | | | with your particular industry, product or service. |
| off. | | | | Self-help books contain much advice that is |
| What happens if you deduct the bad debt on | | | | applicable to your life as a business owner, as well |
| your 2008 return and the customer surprises you | | | | as books on topics such as time management, |
| by making payment in 2009? You simply record | | | | people skills, salesmanship and marketing. |
| the payment as income on your 2009 return. | | | | And while we're on the topic of reading material, |
| If you use the Cash Method of bookkeeping, you | | | | you probably subscribe to newspapers, magazines |
| record the income only when the customer pays | | | | and trade journals that you read primarily for |
| you, so there really is no bad debt to deduct. | | | | business purposes, so these are deductible as well. |
| 2. Bank Charges. | | | | Since none of these three expenses have a |
| All those annoying nickel and dime bank fees that | | | | specific Schedule C line in Part II, the best place to |
| appear on your monthly bank statement are | | | | put them is in Part V, Other Expenses. The total |
| deductible business expenses. The key here is to | | | | of all these Other Expenses (line 48) is then |
| take the time to carefully examine every monthly | | | | transferred to Schedule C, Line 27. |