Can we deduct fish bait in our Travel, Meals and Entertainment Expenses?

It is tempting to include any number of ineligible expenses incurred throughout the year in an attempt to lower a tax bill.  However, we beg you…Don’t do it! Don’t take the bait! If certain criteria are met, there are a number of expenses that can be legitimately deducted. Getting a general understanding of the rules to become an informed small business or nonprofit manager could legally save your organization thousands of dollars each year. 

So what’s up with the fish bait? The IRS says “ordinary and necessary business-related expenses” can be deducted for travel, entertainment, gifts or transportation.  Small business owners, community organizations and church leaders are often confused about what “ordinary” and “necessary” encompasses.  According to the IRS, an ordinary expense is one that is common and accepted in your trade or business and a necessary expense is one that is helpful and appropriate for your business.  Now that that’s clear as mud…let’s take a step back to state the obvious:  you have to travel away from your tax home to deduct travel expenses and your entertaintainment expense can be either directly related to your expectation of generating income or some other specific business benefit or associated with your trade or business by taking place directly before or after a substantial business deduction.  These expenses can include the obvious meals, lodging, airfare, subway, cab and car services.  However, here are some expenses you might not have known and some further issues to consider:

• Travel, meals and entertainment expenses are subject to a 50% limit meaning you can only deduct 50% of the cost or value associated with your expense.
• Records should be kept for a minimum of 3 years.
• Entertainment expenses can include expenses incurred for hunting, fishing or similar trips, including fishing bait.  Cover charges for admission to a night club, social, athletic, and sporting club, theaters, sporting events, and expenses on yachts,  can also be deducted if they are directly related or associated with a specific business purpose.
• Laundry and dry-cleaning, faxing, copying and WIFI expenses while traveling are deductible.
• Paid parking at a sports arena can be deductible if certain criteria are met.
• If you paid more for an item that what it’s worth, you can only deduct 50% of its value.
• Certain expenses can qualify as operating expenses and are not be subject to the 50% limit; these deductions depend on your type of business.
• A reasonableness test is applied and you will not be able to deduct lavish or extravagant expenses (yes, the yacht referenced above is considered ordinary in some cases).
• If a group of business colleagues takes turns picking up the tab without regard to whether any specific business purposes are served, no member of the group can deduct any part of the expense.
• Gifts are usually limited to $25 per customer, employee or other business-related persons.
• You can not deduct dues paid to country clubs, golf or athletic clubs, airline clubs or hotel clubs.
• You generally cannot deduct the cost of entertainment for your spouse or the spouse of the customer unless you can show that you had a clear business purpose for providing the entertainment.

Different rules apply to different situations so be sure to consult with a knowledgeable practitioner and keep your receipts!  For more info, email us at info@pasllc-online.com.

Reference IRS Publications: Travel and Entertainment, 463 and Business Expenses, 535.

Does your org have a social life?

“The average person knows at least 250 people.  Then each of those 250 people knows 250 people.  So instantly, you have access to 62,500 people.” (quoted from The One Minute Millionaire)

The internet is awesome!  As people come together from all over the world in online communties, the world is becoming a much smaller place, barriers to entry are reducing leading to increased competition and the creation of more diverse marketplaces.  How does your marketing plan ensure your organization stands out from the crowd? In today’s economic landscape, there are so many opportunities to engage in business ventures and community projects that have a major impact on improving the quality of life on a global scale.  This increased competition and globalization is placing an increased emphasis on establishing deeper and more meaningful relationships that transcend a single sale or event. 

Some of you may have heard buzzwords like “social media”, “ping” and “tweet” and some of you may have even used Facebook or Myspace pages to create lasting and meaningful relationships in your personal social life.  Without question, implementing a social media strategy to create a deeper attachment with your customers or members is a critical component to boosting your competitive advantage.  So why not take a look at incorporating a social media strategy into your organization’s marketing plan to give it a happening social life as well? 

Here are some quick tips to get you thinking about including in your social media strategy: As a business owner, consider getting a LinkedIn account to network with other professionals and a Twitter account to tweet tidbits of information from time to time to establish yourself as an expert in your field.  When you have an event or market a product or service, give others the Twitter hashtag you’ve associated with your event, product or service.  That way, when people tweet about it, they can all use the same hashtag to help you spread the word.  More and more, churches, nonprofits and small businesses use pictures, blogging, Facebook and Twitter accounts as low cost-high return ways to keep your customers and members connected and stand out from the crowd.

Think you have all these techniques covered in your marketing plan and mastered already? Confirm your effectiveness and use social media monitoring sites like www.buzzding.com to check out your online reputation and see what others are saying about you.

Please feel free to share suggestions below that you have used to help others build their organization’s social presence online as well.  Get in touch with us if you are ready to implement social marketing into your company’s marketing plan.  What?! You don’t have a marketing plan! You need to contact us NOW! Email us at info@pasllc-online.com to get connected with a marketing and public relations professional guaranteed to boost your organization’s social life!

Is your group forming, storming, norming or performing?

Strategic Planning Team.  Marketing Team.  Pastor’s Anniversary Committee. Fundraising Committee: Is your group forming, storming, norming or performing and why is it important for managers to know the difference?

Businesses and non-profits have to respond more rapidly to market changes in today’s economy by increasing the productivity and performance of their operations which is making the importance of high performing teams in both nonprofit and small business settings even more critical to the success of an organization.  Managers have to shift from the role of director to facilitator and embrace the need for collaborative decision making through the use of groups to meet certain performance objectives.  As facilitators, it is imperative that managers understand the dynamics of the group because a group’s development has a direct impact on its performance and capabilities.

Groups are dynamic and constantly changing: they can be formed for short term or long term objectives and can be empowered with various levels of authority.  However, one constant about all groups is the five stages of group development they all endure.  A commonly used model to explain group development delineates five stages: Forming, Storming, Norming, Performing and Adjourning.  Forming is when members are introduced to the group’s objectives and plays nice while getting to know each other.  Managers should understand team members are still operating independently and looking for an articulation of expectations and guidelines. Storming is when the drama begins.  Arising conflicts, challenges, demands and power struggles can threaten the effectiveness and longevity of the group if a manager allows the conflict to get out of hand.  Norming is when team members arrive at a consensus and begin to operate as a unit with a common focus.  Because some members will have given up some of their ideas for the sake of the team, it is important that managers make sure members feel validated for their role and contributions to the group.  Performing is when tasks are being accomplished and the group’s effectiveness and efficiency is at its highest.  Managers should continue to monitor the effectiveness of each contributor to reduce the risk of one team member loafing while the others carry the load.  Adjourning occurs at the conclusion of the task after the group’s task is complete.  Managers should use this time to discuss lessons learned and identify opportunities for improvement.

A key contributor to any group’s effectiveness will depend on how effective the group’s manager is at understanding the impact each of the above stages will have in the interaction of the group throughout the project.  All groups are different and working with humans in any setting can be a challenge.  I pray that you will have the strength to endure the ups and downs of working in groups and embrace the concept of working in groups as a necessary resource to your organization’s sustainability and long term success.

 Hope this helps!

Hello world!

Welcome to our blog!  Why this blog, you ask? Well, I am here for you! I admire the strength and spirit of small business owners, faith based leaders and community grassroots organizers.  Platinum Accounting Solutions was created to partner with those of you who need practical solutions and strategies to meet your business goals.   Our team of professionals want you to stay on top of your game and encourage you to subscribe and also request RSS feed updates to stay connected with us because this blog will feature an assortment of tips including

• how to secure small business and non-profit grants,
• running successful fundraising campaigns,
• using and customizing Quickbooks,
• 501c3 and tax compliance (for profit and non-profit),
• implementing best practices for board governance,
• organizational and group development and change,  etc. 

Please feel free to email us at info@pasllc-online.com or visit our website at www.pasllc-online.com for more info.

Jean Toney
Platinum Accounting Solutions, LLC