One thing nobody mentioned yet - if you use actual expense method the first year you use a vehicle for business, you CAN'T switch to standard mileage rate later. But if you use standard mileage rate first, you CAN switch to actual expenses in future years. Something to keep in mind before you commit to actual expenses!

This is such a helpful discussion! I'm a CPA and want to add a few key points that might help clarify the record-keeping requirements: 1. **Contemporaneous records are crucial** - The IRS requires that mileage logs be created at or near the time of travel, not reconstructed months later. This is true for both methods. 2. **Sampling can work** - You don't need to log every single trip if you can establish a representative sample that demonstrates your typical business use pattern. A 3-month detailed log that shows consistent business use can often support your claimed percentage for the full year. 3. **Digital solutions are IRS-acceptable** - Apps, GPS trackers, and other digital tools are perfectly valid as long as they capture the required elements: date, business purpose, destination, and mileage. 4. **The 70% estimate concern** - Your gut feeling of 70% business use needs documentation to back it up. Without records, the IRS could challenge this during an audit and potentially disallow the entire deduction. My recommendation? Start with the standard mileage rate method for your first year since it's simpler and keeps your options open. Use a mileage tracking app to build good habits, then evaluate both methods next year when you have solid data to compare the actual dollar benefits.

Has anyone dealt with tax vs book basis issues for accrual to cash conversion? My accounting is on accrual basis (because it makes more sense for our operations) but we file taxes on cash basis. It's becoming a nightmare to convert everything at year end.

One thing I've learned from managing this for my own business is that prevention is better than cure when it comes to book vs tax basis differences. I set up a simple system where I code transactions with tax implications right from the start. For example, when I enter a meal expense, I use a specific account code that reminds me it's only 50% deductible. For equipment purchases, I immediately note whether I plan to use Section 179 or regular depreciation. This way I'm not scrambling at year-end trying to remember the details of every transaction. Also, regarding your sales tax question - think of sales tax collected as "holding money for the government." It never becomes your income, so it should go straight to a liability account. Sales tax you pay becomes part of your expense or inventory cost, which does affect your income taxes as a deduction. The key is keeping good records from day one rather than trying to sort everything out later!

10 Since nobody else mentioned it - yes, the 7.65% employer portion is a business expense that's tax deductible! So while you're paying that extra amount, it does reduce your overall business income for tax purposes. Let's say you're an S-corp or LLC with profits around $150k. That employer portion of payroll taxes would reduce your taxable business income. Depending on your tax bracket, this could offset roughly 22-37% of the cost.

Just wanted to add some practical advice from someone who's been doing payroll for small businesses for over 8 years - make sure you're also budgeting for workers' compensation insurance, which varies dramatically by industry. For landscaping like yours, it can be quite expensive (sometimes 3-8% of payroll) since it's considered higher risk. Also, don't forget that some states have additional payroll taxes beyond what's been mentioned. For example, California has State Disability Insurance (SDI) that employers contribute to, and New Jersey has both disability and family leave programs. These can add another 0.5-1% to your employer costs. I'd recommend setting up a separate account where you automatically transfer about 12-15% of each payroll to cover all these taxes and fees. It prevents the shock when quarterly payments are due and helps with cash flow planning.

This is really helpful information! I'm also a small business owner and have been hesitant about claiming advertising expenses because I wasn't sure what counts. One thing I'd add - make sure to separate personal vs business advertising clearly. I learned this the hard way when I posted about my business on my personal social media accounts and boosted those posts. My accountant explained that if the advertising is done through personal accounts or mixed with personal content, it becomes much harder to justify as a pure business expense. Also, @Connor Murphy, since you mentioned you're still learning about business deductions - don't forget about things like business insurance, professional development courses, industry publications, and even business-related travel. These can add up to significant deductions beyond just advertising!

@Connor Murphy, you're getting great advice here! I wanted to add something that might save you some headaches down the road - make sure you're tracking not just the amounts you spend, but also the results from your advertising efforts. The IRS doesn't require this for deduction purposes, but if you ever get audited, being able to show that your $13k in advertising actually generated measurable business results (increased sales, new customers, etc.) makes it much easier to justify the expenses as "ordinary and necessary" for your business. I keep a simple spreadsheet tracking each campaign's cost vs. the revenue it brought in. For your newspaper ads, you could track how many customers mention seeing the ad. For Facebook/Instagram, the platforms already give you detailed analytics on reach and engagement. Also, since you mentioned you're still learning - don't forget that the cost of tools you use to create or manage your advertising can also be deductible. Things like Canva Pro subscriptions, scheduling tools for social media, or even a portion of your internet bill if you're doing significant online advertising work from home. The key is just keeping good records of everything. Sounds like you're already on the right track with ramping up your marketing - that investment in growing your business is exactly what these deductions are designed to support!

Has anyone had experience with the deferred salary situation specifically? I had something similar happen where I took stock instead of salary, and when the company went under, the IRS initially questioned my write-off. I had to fight to prove it wasn't just a capital loss.

One thing to keep in mind with your angel investment is that you might also want to look into whether it qualifies as Qualified Small Business Stock (QSBS) under Section 1202. Even though the investment became worthless, if it was QSBS when you acquired it, you could potentially get better tax treatment on any gains from other QSBS investments by increasing your exclusion amount. Also, regarding your $22,000 in unrealized stock losses - if you're planning to hold onto those stocks long-term, consider whether tax-loss harvesting makes sense. You could sell the losing positions before year-end to realize the losses, then use them to offset any capital gains plus up to $3,000 against ordinary income. Just be careful about the wash-sale rule if you want to buy back similar positions within 30 days. The timing advice from Amara is spot-on. Since you're already planning to work with a CPA, make sure to gather all your documentation now - startup dissolution papers, final investor communications, employment agreements showing the salary deferral arrangement, etc. Having everything organized will make your CPA consultation much more productive and potentially save you money on their fees.