How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Shane-CPA Your Own Question
Shane-CPA
Shane-CPA, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 265
Experience:  Shane Northrop is a Certified Public Accountant, Personal Financial Specialist and a Chartered Global Management Accountant
71228106
Type Your Tax Question Here...
Shane-CPA is online now
A new question is answered every 9 seconds

How particular does a business owner need to be with classifying

This answer was rated:

How particular does a business owner need to be with classifying expenses. I'm not advocating or suggesting a sloppy approach, but sometimes it is a little difficult to know how to classify an expense. For example: We track repairs and supplies we purchase for the shop. Now these shop supplies are, in a way, necessary to do the repairs, but are not parts purchased for specific repair jobs. Doesn't the IRS focus more on proving the validity of the business expense than classifying it exactly?

Shane-CPA :

Hello...my name is XXXXX XXXXX I am a Certified Public Accountant. I look forward to assisting you with your tax question.

Shane-CPA :

The IRS is more concerned that the expense you are claiming is ordinary and necessary for the business and that similar businesses in the same industry would also incur these expenses. The categorizing of the expense isn't as important, although some expense categories have specific limitations. For example, the expense category of "meals and entertainment" is limited to 50% of the amount as a tax deduction, so obviously you wouldn't want to classify something in a category such as this which would limit the tax deduction.

Shane-CPA :

Charitable contributions is also another limited expense item for tax deductibility...

Shane-CPA :

As far as classifying something as part, supplies, office expense, repairs, etc....that would not be a major concern

Customer:

OK, Great. Would those two categories be the only two that I would need to be careful with?

Customer:

As far as taxation is concerned?

Shane-CPA :

Those expense categories and also depreciation expense are the categories that have specific tax deduction requirements...

Customer:

Thanks for your help. I'll rate your service as excellent!

Shane-CPA :

You're very welcome! Please let me know if I can provide you with any assistance in the future. If you are completely satisfied with the service you received, please provide me with positive feedback so I may receive credit for my response. If you feel exceptional service was provided, bonuses are greatly appreciated. Thank you for using Just Answer and I hope you have a great day!

Shane-CPA and 3 other Tax Specialists are ready to help you