As 2016 is drawing to an end, it’s normal to start thinking about questions pertaining to your business’s tax returns. Larry L. Bertsch, CPA & Associates, your small business accountant in Las Vegas, is ready to answer all of your questions. We all want to save money by getting portions of our tax return deducted or waived off, and you may be wondering if you can deduct accounting fees. This is covered in Schedule A of the tax code under miscellaneous itemized deductions.
Keep in mind that a cost is only deductible if it’s recognized as ordinary in the course of business. All accounting fees for any tax preparation is able to be deducted for the same year in which the fee was paid.
When Can You Deduct Accounting Fees?
The short answer to this question is yes: You can write off accounting fees in many cases. Business owners are able to deduct fees paid to consultants, lawyers, and accountants.
The only requirement is that the fees that you pay are for work-related business. If the fees you paid were for personal purposes only, then they are generally not able to be deducted. Let’s look at a few examples:
- If you’re just starting a business, any accounting fees are deductible solely as start-up expenses for your business. In the first year of business, you’ll be able to deduct $5,000 of your start-up expenses for any accounting or legal fees. Any amounts paid in excess of $5,000 can be deducted over a 180-month period.
- Accounting fees are deductible business expenses. They might include fees that you pay an accountant to either set up or keep the business’s books, prepare a business tax return, or for business tax advice. If you’re an independent contractor, you can deduct the expense of hiring an accountant to complete the business section of your tax returns. This includes Schedule C or other business tax forms.
What Types of Tax Deductions for Accounting Expenses Are There?
- All expenses including bookkeeping expenses, auditing expenses, and accounting expenses fall under accounting fees deductions.
- Fees charged by a professional accountant or financial advisor for reviewing any financial statements or accounting books can be deducted. Remember, though, that this includes only tax processes which are carried out for your business, not for you as an individual.
- Any bookkeeping charges, including accounting software, can be deducted.
- You can write off any CPA services and accounting fees. Every business should hire a CPA (Certified Public Accountant) for their help with strategy and tax preparation. CPAs can help with the submission or filling out of forms.
Check out the IRS’s Publication 529, which will explain exactly how a tax preparation fee must be recorded in a tax return for the most savings on your part.
Contact Larry L. Bertsch, CPA and Associates at (702) 471-7223 for the best information on tax deductible business fees. As a practice in business since 1964, our company offers a complete range of accounting, small business bookkeeper services, tax preparation and more at affordable fees.