[bluepersonality]

Hello, I would like for someone to explain how tax write-offs work to me, in the most basic simple way possible.
I do quite a bit of the office work for my boyfriend's business, and want to make sure I am being efficient. I've asked our bookkeeper for help, but I still need more...
1) How do I keep track of purchases that are considered tax write-offs? Do I need to log them in a book w/copies of receipts, writing in details of the purchase? Do I do anything special with them, or just let them go to the bookkeeper & expect her to figure it all out?
2) How do they work? If I buy advertising for $100, does that mean they take $?? Off what we owe in taxes every year?
3) How do I best file them away? Do they go into a folder with the monthly receipts, or do they go in their own special tax folder?
4) Do regular bills, such as natural gas, electricity & internet fall under this category?
~Any office organization tips are welcome!!
Thank you

[ScottGem]

There are two ways to reduce the amount of taxes one has to pay. The first way is through deductions. Included in deductions are losses and expenses. I would not call them tax write-offs. Purchases of items used by his business would be considered expenses. Not all expenses are deductible. The second is credits. These are items that can be used to directly lower the taxes you are required to pay.

1) Yes, all purchases made by the business need to be recorded and classified so when the tax return is filed, they can be used to reduce your taxable income.
2) Deductions are used to reduce the amount of your taxable income. So if the business had revenues of $50,000 and deductible expenses of $10,000 then it has net income of $40,000 and has to pay tax on that amount of income.
3) Frankly I would recommend getting an accounting package like QuickBooks to track income and expenses. Absent that, I would learn what is deductible expenses and what isn't and maintain 2 files one for each category. Or use one file and let your accountant sort it out.
4) See above. All three should be deductible expenses assuming they are fully attributable to the business.

Without knowing more about the business, what type, how its run, what it does etc. its hard to be more specific.

Tax write-offs are generally things purchased that will incur a loss so it can reduce taxable income.

[bluepersonality]

That is very helpful, thank you! Basically I need to get quickbooks and things would go much smoother.

[ScottGem]

Probably. His accountant will probably love you for it.