Audits Revisted
August 17, 2009
In a prior post I discussed how you can survive an audit. Documentation of your expenses, but it should be noted that that the deductibility of an expense must pass the threshold of being both “ordinary” and “necessary” for a business.
The ordinary and necessary threshold comes mostly into play when it comes to expenses that can seem personal in nature at first glance. Expenses like meals, entertainment, travel, automobile and some others always seem to get increased scrutiny from an auditor because it can be difficult to separate what is business and what is pleasure.
While having receipts for these expenditures is important you may want to bolster the evidence for these deductions by doing the following:
Meals and Entertainment
On the receipt I write down which client that I have met with. In some cases I will also briefly summarize the purpose of the meeting.
Travel
I document the purpose of the travel expense. If I am traveling to a conference or training I keep a copy of the agendas that the conference passes out.
Automobile
I keep a simple mileage log that shows the date of travel, the place visited, and the amount of miles the trip was. I have also seen clients simply you their schedule to document their mileage.
