- Home Office Reimbursement – If you (or an employee) have a home office you are using for your work for an S-corporation or partnership, we strongly recommend adopting an accountable plan. Many LLCs are considered one of these two business types by the IRS. Please see this linked sample accountable plan. S-Corporations should reimburse employees and shareholder-employees monthly. Partnerships may reimburse partners. However, if the operating agreement requires that these expenses be paid by the partners, the partner may deduct these expenses on their personal return. Note that if you have other employees working remotely for business reasons (including remote employees) instead of personal preference, they can be reimbursed under an accountable plan.
- Business Meals Deduction – Beginning 1/1/23, the deduction limitation for business meals went back to 50%.
- Business Mileage – If you are not tracking miles throughout the year, we strongly recommend starting a mileage log. There are apps available for mobile devices that can automate this task for you. In addition to the mileage log, it is best practice to record the mileage as of 12/31 every year per the odometer on your business vehicles and personal vehicles used for business in order to substantiate business miles. The IRS may not accept your vehicle expense deduction without a mileage log.
- 2023 mileage rate 5 cents per mile
- We also need your commuting miles and total miles driven in 2023.
- 2024 mileage rate Not yet updated by the IRS
- Personal vehicles used for business – If you haven’t already done so, complete a mileage log to substantiate the miles you incurred on your business vehicles or personal vehicles used in connection with your business in 2023. The mileage log should substantiate the date, starting location, destination location, miles, and business purpose of each trip. If you don’t have a mileage log, this is a good time to go back through your calendar to look at business appointments in order to reconstruct your business miles for the year.
- Vehicles owned by the business – Personal use by employees or owners of vehicles owned by a business should be added to that employee’s W-2. Please contact your payroll service or our office for details. Mileage logs should be maintained for all business owned vehicles to substantiate business usage unless that vehicle is obviously not suited for passenger transportation (for example, a delivery van).
- Bonus Depreciation – Applies to qualifying property placed in service after 12/31/17 and before 1/1/27. For 2023, the percentage deduction allowed dropped from 100% to 80%. For 2024, the percentage deduction will be 60%. You may want to purchase and place in use planned new assets before 12/31/23 to take advantage of the higher bonus depreciation.
- Inventory Count – If your business has inventory that is an asset on the balance sheet, please conduct a count of the inventory at or near 12/31. The inventory needs to be valued at purchase cost.