A very good rule of thumb to follow is to always, always report all of your income. Not reporting income can be construed as fraud. Fraud comes with big penalties and possible jail time.
There’s more leeway on how you report expenses. In most cases, over-reporting expenses results in penalties and interest only. It’s not considered fraud.
So, when in doubt if something is business income or not, report it as income. Then, make sure you’ve taken all allowed expenses against that income.
This one simple tip can save you tremendous amounts of money and grief in the event of an audit.
On Track has been serving Portland since 1993 and combined with Loretta’s 32 years of experience has helped at least 150 organizations and individuals with their businesses. We can’t say we’ve seen it all, but we’ve seen a lot and know to help your company be its most efficient.
If we don’t have the answer, we’ll refer you to somebody who does. We have a network of professionals with whom we’ve worked to help you stay on track!
Big news for retailers and restaurants.
The IRS is going to compare your 2011 gross receipts and credit card revenues. Your credit card processor will be sending you a 1099-K. This IRS will compare this data with your tax return to determine if the gross receipts fall within an acceptable percentage of all receipts: cash, check and credit card.
This means that if an organization isn’t reporting its cash receipts, and is part of an industry where income averages are well defined (restaurants, personal service companies and most small retailers), it would be a good time to make sure you’re reporting all of the cash you receive.