Uncle Sam Want’s My Lunch Money

If you’re like me than you know lunch or dinner is the best place to meet with clients.
It’s more convenient and since you both have to eat, it makes
sense to turn lunch into a business expense.

Bringing in lunch for your employees can also turn a meal into a business deduction. However don’t go cray
thinking every time you have lunch you can stiff Uncle Sam.
Knowing the difference can make a big difference in your $$$ Money!

Feeding Clients

The IRS generally classes dining expenses under the broader category of entertainment
expenses and makes them a little harder to write off than one might hope. Using logic, most meals aren’t
deductible — after all, you’d still be eating lunch if you didn’t own a business or had to make a sale.

But as long as lunch passes one of the two tests used by the IRS, it can
be either entirely or partially deductible.

The first test is whether the expense is directly
related to your business. You did engage in business with the person during the entertainment period;
You were trying to make some money!

The second test is proving that your expenses were associated with business. So show proof if happen directly
or right after some wheeling and dealing on your end.

In general, you can deduct only fifty percent of your meal and entertainment business expenses .
However, depending on what kind of business you may be able to take advantage of exceptions to the
fifty percent limit. For instance, meals and entertainment provided to the general public as part of a
marketing campaign can be deducted in full.

Feeding Your Employees

If you order out for employees working late or throw a catered party for your staff,
the expense is generally deductible — although your meal may not be. Though if you buy lunch often enough,
it may be considered more of a fringe benefit.

Track of Your Business “Good Time” Expenses

You must keep that record in the moment, though — trying to recreate such a
record from bank statements and receipts at the end of the year won’t do any good. Nor should you rely
on your receipts and scribbling a description of who you ate with and why. It’s too easy to lose receipts
or to be unable to interpret just what you wrote down.

The key is that they set up a system for recording and maintaining these records that will work for them
throughout the year. It doesn’t matter if it’s on a smartphone, excel, or even if you keep the records
in a notebook. The key is that the description of the expense and basic details need to be
recorded at the time of the expense.”

Your records need to include the time, date, location, participants and a description of what business was
discussed.

A Business Based on Food

Lunch may not count but all the research you need to do does!!
All the food you try and test is part of your business cost but once again you need to prove it.

Your Own E Expenses

I know it can be confusing to know which one you does and doesn’t count. Since every situation
is different but tax professionals like Accounting Guide & Taxes are familiar with your business
and can give you more detailed advice about how to handle deducting your entertainment expenses.

Let us guide you in the right direction keeping more money in your pocket!

Call me now at 305-826-1711