Have Your Small Business Expenses Gotten Lost in The Matrix?

photo credit: thematrix101.com

If you take the blue pill, all of your insurance premiums qualify as small business tax write-offs. If you take the red pill, you can deduct your Shoeboxed.com membership. Wait a second…what if Neo took both pills at the same time? In the 1999 action movie The Matrix (that’s right, we’re taking it back to the original), our hero Neo must determine what’s fantasy (“the matrix”), what’s reality, and what to do about it all. Can you imagine keeping track of small business expenses with that kind of uncertainty? Yet so many small business owners keep track of their business expenses as if they’re operating within some kind of mysterious matrix.  What can I write off? What doesn’t count? In an effort to stay off the IRS’s radar, they end up losing out on a lot of money every year. Here is a refresher course on some commonly confused business expenses:

1. Health Insurance

If you’re a small business owner and are self-employed, you can deduct the entire cost of your health insurance payments – that’s right, 100%! Just be careful if you’re a new startup company, or if your business didn’t turn a profit in its first year. You can’t deduct more than the amount of your net profit for that year. And if you’re married, things get both better and worse – just like discovering the matrix, right? For better, if your spouse is employed by you, you can also deduct their health insurance as part of your business expenses. For worse? If you had the option of going on your spouse’s health insurance, you’re not allowed to pay for your own and then write it off.

2. Phone Calls

Neo and Trinity were able to artfully avoid the Agents simply by making a phone call. While it may not be quite as easy to find a payphone nowadays, it is possible to make your phone calls work for you in terms of your business expenses. The key is to get specific. Before scanning or mailing your phone bill to the folks at Shoeboxed, circle each phone call that was a business call. That way your totals will be 100% tax deductible at the end of the year. You can also get a phone (mobile or landline) that is totally dedicated to business-only calls. Just make sure you really only use it for business calls, in case Big Brother (or Agent Smith) is listening. If you do the first option, you’re not able to include all of those taxes and surcharges in your write-off, but if you get a separate line, you may be able to do so.

3. Meals

Neo and the crew could only enjoy a nice steak when they were in the matrix. In the real world, they consumed an oatmeal-esque slop that looked and smelled worse than prison food. While you’re traveling and keeping track of your business expenses, don’t forget that there is a very important difference between where you sleep and where you dine. The cost of your hotel room – down to what you tipped the employee who helped with your bags – is 100% deductible. However, your meals are only half off. Even if you’re entertaining clients or having a lunch meeting that is completely and utterly work-related (think Neo meeting Morpheus for the first time), Uncle Sam only allows for 50% of those costs to count as tax write-offs. So enjoy the fanciest hotels that the matrix has to offer, but return to the ship when it’s time for your oatmeal.

Tracking Bourne’s Business Expenses

photo credit: firstshowing.net

Team Shoeboxed was really surprised over the weekend when we realized that one of our newer accounts belonged to none other than the absentee star of the latest installment in the Bourne trilogy, The Bourne Legacy. That’s rightthe account belongs to Mr. Jason Bourne himself. Now we all know that Bourne has been so incognito lately that he could barely afford to make an appearance in his latest film, opting instead to (and this is just our theory) work behind the scenes, pulling Jeremy Renner’s proverbial puppet strings. The hero’s reemergence has less to do with the CIA, however, and more to do with a personal problem: Bourne’s been having trouble tracking his business expenses.

Four films and several years later, Bourne has dissociated himself with Treadstone, and funds from his former glory days are running low. Whereas before, he was not responsible for tracking his expenditures, now Bourne must pinch every penny as he attempts to stay below the radar. His typical business expenses include multiple international flights per month, a different hotel room every night, and wining and dining his lovely wife, Franka Potente (c’mon, you didn’t think she was really dead, did you?) With so much on the line, especially a rep to protect, we knew that Bourne would benefit from a Shoeboxed.com account.

To help Jason Bourne keep track of his business expenses, we first had him download our smartphone app to all of his different phones (he has, like, six or seven). We then created separate Shoeboxed accounts for each of Bourne’s different identities. This way, if he’s using his German passport, he can track those business expenses to the Shoeboxed account associated with Klaus Wiener Schnitzel. If he’s traveling in Russia, he uploads his e-receipts directly to his VladimirScheglov account. Bourne doesn’t have time to worry about organizing all of his different business expenses and making sure they’re ready for his (top secret) tax guy. When he’s busy trying not to get killed, Team Shoeboxed is toiling away, verifying data, organizing receipts, and basically acting as a personal assistant to the coolest action star ever.

We can’t exactly reveal where most of Bourne’s scanned receipts have been coming from, but suffice it to say that this dude is on the move. Ever since Shoeboxed starting keeping track of his business expenses, Jason Bourne has had more time to focus on the things that matter most – killing bad guys (but only when it’s absolutely necessary), looking at Franka with smoldering eyes, trying to remember stuff about his past, and making Jeremy Renner worry about his job security. If Shoeboxed can help the best hit man in the world stay organized, just think of what an account could do for you!

What’s your favorite movie in the Bourne series?

Was Jeremy Renner a good replacement for Matt Damon?

What was the most exciting business expense you’ve ever reported?

How to Keep Personal Expenses Separate from Business Expenses

photo credit: telegraph.co.uk

As a small business owner, keeping your personal expenses separate from your business expenses is as important as keeping the two people you’re casually dating from chatting each other up at Starbucks. Some things are just not meant to be together, and if ever the two do meet, the situation can get a little, well, sticky.

While drinks with Jennifer on Wednesday and dinner with Stacy on Friday may be pretty easy to keep straight, keeping your office supply expenditures separated from your chocolates-and-flowers expenditures may not. So what’s a savvy-but-buy SBA to do?

First of all, brush up on some bedtime reading – that’s right, your favorite piece of literature, the IRS website. Depending on your type of small business, you could be missing out on a bunch of potential business write-offs, or worse, writing off personal expenses as business expenses. Do you know, for example, the rules concerning dining, entertainment and travel expenses? What’s the difference between going out to dinner with a client, and going out to dinner with an employee? What if you’re going out to dinner with Stacy, and she’s an employee? (Wait! Why are you dating your employee? Stop that right now!) The point is to first get super clear about what you can write-off, and when. A good to clue that something’s amiss is if you’re writing off everything, or nothing at all. Once you’re clear on what qualifies, you can begin keeping track of receipts.

You wouldn’t invite Stacy and Jennifer to the same movie, at the same time, on the same night, right? So why would you buy products or shop online for personal expenses and business expenses, pay for everything on one credit card, and get a single receipt?

“Because it’s faster and easier,” I hear you say.

In the extra five seconds it takes you to complete a separate transaction or ask for a separate receipt, you save eons on future headaches (and, let’s get real here, possible fines or even – eep! – jail time).  So if you’re at a store, shopping for business stuff, and happen to grab something that would qualify as personal expenses, annoy the person in line behind you and insist on two receipts. The dude buying kitty litter and batteries may not thank you, but your accountant will.

Now that you have separate receipts for personal expenses and business expenses, what will you do with them? Toss them in the murky depths of your purse or wallet, where they’ll fester and mix together, the ink fading away into un-readable oblivion? No way. You are going to go and get yourself two – that’s right two – big ‘ol Shoeboxed envelopes, and let us scan your stuff separately. At the end of the day when you come home, or first thing in the morning before beginning the work day, put your personal expenses in the envelope next to Jennifer’s picture, and your business expenses in the envelope next to Stacy’s picture. By the time you’ve chosen between the two women, the money you spent courting them will be so scanned and organized, you’ll have saved enough for that engagement ring you’ve been eying! (In case you were wondering, that’s a personal expense).

What’s the weirdest thing you’ve ever written off as a personal expense?