Being a manager of your talentfrom FaithWhat does it take to be an artist manager? Well that is quite the question; it takes improvisation, structure, organization, patience, perseverance, dedication, a lot of public relations but most of all self confidence. In this field you're leading a human being for all types of things from diets to food and accommodations.In my personal

Equine Accounting: On the road again...deductible expenses from horse show travel

With show season behind us for most parts of the country, it's a good time to discuss which expenses which are incurred while you are showing "away from home" are deductible. This will help you when getting information together for your current year tax return as well as preparing for next season's expenses.
In general travel expenses are deductible if they are directly related to conducting your business. "Ordinary and necessary" (as defined by the IRS: an ordinary expense is an expense that is common or accepted in the taxpayer's trade or business; a necessary expense is one that is appropriate for the business) travel expenses such as transportation, lodging and incidental travel costs, such as laundry, tips etc. would be deductible if supported by documentation such as receipts. Be sure to document the business purpose of each expense.
The cost of meals consumed on a business trip are deductible, subject to a 50% limit. Again,only the ordinary and necessary costs of meals are deductible. Facts and circumstances dictate what is considered ordinary and necessary but keep in mind the ultimate determination is made by the IRS (if your are audited).
If you engage in both personal and business activities while on your trip, be sure to document in detail which costs are associated with your business. If you travel to a location for primarily personal purposes and while there, transact business, the costs of travelling to and from the location would NOT be deductible. But if you travel for primarily business purposes, then your costs of travelling to and from the location would be deductible. You would allocate the costs incurred while there between personal and business and only the business portion would be deductible. If your transportation costs for showing are significant, the tax savings of determining those costs to be deductible could b substantial.
If anyone else (including your spouse) accompanies you on your business trip, in order for those expenses to be deductible, the person accompanying you must work for your business, their presence must serve a bona fide business purpose and the costs would have been deductible had they been incurred by someone who was not accompanying you.
There MUST be a business purpose for showing, in order for the related expenses to be tax deductible. Don't rely on theory and generalities to prove your point to the IRS if you are audited. At every show, keep a record of who you coached, what potential clients you met, the sales horses you rode, etc. If you need to accumulate certain scores or ribbons in order to be certified as a judge/instructor/etc., document which shows and which classes you entered in order to fulfill your requirement. You can use this information not just in case of an audit but in planning for the same show next year, to send out marketing materials and to track fulfillment of any continuing education requirements.
Showing can be a great marketing tool and a legitimate tax deduction. Keep detailed records and follow IRS regulations. Best wishes at the show!

Equine Accounting: Entity ABCs

SP, LLC and Subchapter S - what does it all mean and why do you need to know? These are several of the different types of legal entities that businesses adopt, which allow the business to take on an existence apart from it's owners - though the owners still control the business.
The type of entity that you choose will affect your personal responsibility for the liabilities of the business. A lawyer can best advise you as to which entity would be the optimum solution for your personal situation.
But the choice of legal entity also affects your personal income tax liability. In order to best utilize the tax advantages of each type of entity, you need to understand how the incomes goes from your business cash register through your tax return and into your pocket.
Flow through entity types: An entity is considered a "Flow through" type because the income of the entity is treated as the income of the owners. For Federal tax purposes, a flow through entity avoids double taxation because only owners themselves are taxed on the revenue. Net Income is divided among the owners and each owner pays taxes on that income as part of their personal income tax return. Generally, losses from the business can be applied against income from other sources (investment income, salary of spouse, etc), which will decrease the individual tax liability. Whether these losses can be applied against other income is subject to regulations on hobby loss, tax shelters and material participation, among others.
Types of flow through entities include:

1. Sole Proprietorship: This is the simplest form of doing business for tax purposes. a business operated by one individual owner (or married couple who jointly own and operate a business may elect for each spouse to be treated as a sole proprietor) is a sole proprietorship. You file a Schedule C or F (Farm income) as a schedule of your personal Form 1040 and the business is not required to file a separate tax return.
2. Partnership: When a business is operated by two or more owners (in this type of entity, owners are known as "partners"), with each owner contributing to the business and each sharing in the profits and losses of the business, the owners may elect the partnership as the legal form of entity for that business. The partnership is required to file a tax return (Form 1065) but the form is informational only. There is no tax liability for the business itself.
3. Subchapter S Corporation: A business with 100 or fewer ownrs (in this type of entity, owners are known as "Shareholders") may elect to be a Subchapter S Corporation. As a type of flow through entity, income or loss of the business is included as part of the personal income of each shareholder and except for under very limited circumstances, the business has no income tax liability. The corporation is required to file a tax return (Form 1120S) but the form is for informational purposes only.
4. LLC: The LLC (Limited Liability Company) is a legal entity but is not recognized by the IRS for tax purposes. So a business organized as an LLC would be required to elet to be taxed otherwise - as a Sole Proprietorship, Partnership or C Corporation. Owners in an LLC are known as "Members".

Non flow through entity type:

C Corporation: This probably the most complex form of doing business. A C Corporation is a separate taxable entity from its owners. It not only files a separate tax return but has its own tax liability. Profits by the business are taxed on a corporate level and if distributed to the owners, taxed again on an individual level.
Some important considerations when determining the best type of entity for your business would be the extent to which you need to limit legal liability and the future plans for your business in years and generations to come. In some cases, relief from personal legal liability has more value to the owner than simplicity of operation or tax benefits. Seek the advice of an attorney when making this important decision. Be sure you understand not only the benefits but the future responsibilities involved in your choice.