[MeaningOfLife]

I am assisting a family member (pro bono) with his business and personal taxes. I am reviewing 12 months of activity (approximately 30 expense transactions per month). I have to sort through hard-copy bank statements. I could have uploaded the info to the software I am using, but he didn't get the files in time from his bank. I am double checking and adding misc receipts for fixed expenses (electric, etc.) that he doesn't have bills for. I am amassing all the bills that were available. I also did all the payroll (5 different employees) and did all the payroll tax reports to the IRS. I dealt with the creditors while the biz was going and I did all the work to sell the business. My question for you guys: If you were the office manager and final tax accountant (to get all his taxes done), how much work per month do you think this work might have entailed? I know the payroll adds quite a bit of work - but if you had a potential client come to you with this load, what hours do you think you'd have to bill him or her? Thanks!

[AtlantaTaxExpert]

Payroll for five employess is AT LEAST $150 per month, depending in the state. $150 is what I would charge for Georgia, but New Jersey, New York, Massachusetts and California are a LOT more complex, hence a higher fee would be justified.

The rest is standard bookkeeping, about $75 per month.

Final tax return: $300.

The sale of the business is a consultation fee, say $750 - $1,000.

[MeaningOfLife]

Hey, thanks for the info. Also, 'just a quick question - do you require your clients to have ALL receipts to corroborate purchases? Or is there also the >$75 required by the IRS? I can't find consensus on this info. Have you ever seen the IRS refuse a business expense 4 lack of receipt?

[AtlantaTaxExpert]

I generally follow the $75 rule, unless it is obvious that the client is trying to claim too much expense for transactions under $75.

[MeaningOfLife]

Atlanta - Thx for the info. So, it appears to me that there is some type of code of silence re: the '75 dollar rule.' I don't see any definitive info on it much of anywhere. The IRS mentions it (if memory serves) in regards to business trips. So, I wasn't sure if the rule applied to regular exp.

So basically though, would it be safe to say that if an expense seems normal and prudent (not extravagant) - an IRS auditor would not fight it, if it was less than $75?

[AtlantaTaxExpert]

It HAS been my experience that most IRS auditors do not argue general $75 expenses as long as they appear to be normal, business-related expenses.

[MeaningOfLife]

Atlanta - have you noticed that people don't talk much about this $75 rule? I don't see a lot of consensus @ it and the IRS isn't forthcoming @ it either. Is there some type of brotherhood agreement between tax accountants and the IRS to avoid talking about it? This way - small biz owners will err on the side of compulsively saving every receipt?

[AtlantaTaxExpert]

Most tax preparers do not talk much about the standard deduction, either, because it is a basic premise of the field.