Tucson Tax Team LLC + 6111 East Grant Road + Tucson, AZ 85712 + (520) 777-7844
Our Responsibilities: Tucson Tax Team will prepare your business income tax return. We do not
prepare and are not responsible for preparation of other taxes such as state use tax, payroll tax, etc.
Your Responsibilities: We recommend that you keep income statements, bank and credit card
statements, travel expenses, business mileage, business utilities, home utilities and other home
expenses if you have an office in home for 7 years. Payroll records must be kept forever. Receipts for
depreciable assets or improvements should be kept for 7 years after the asset has been disposed of or
fully depreciated. Excessive or inappropriate expenses are disallowed.
Income: The IRS requires you to report all income received in the course of operating your business.
This includes “non-income” sources such as bartering. If you have had losses for 3 of the last 5 years,
you may need to demonstrate that you have a profit motive to prevent hobby reclassification. It is
advisable to separate business funds from personal funds; personal expenses should not be paid from
the business account and vice versa.
Expenses: All deductible expenses should be ordinary and necessary. Commuting mileage is not
deductible; miles driven for business are deductible with a log stating date, destination, purpose of
trip, and miles driven. 50% of the cost of business-related meals is deductible. 50% of meals just for
yourself are deductible only if you are away from your tax home. Meal expenses must be
documented with the date, the client or associate, and the purpose of the meal. Travel is deductible if
you can demonstrate a substantial business purpose. These expenses may include ground/air
transportation, lodging, meals as described above, incidental expenses. If your travel is mixed
business and personal, your deduction may be limited. Primary home phone lines are not deductible;
second home lines used for business may be deducted. The business portion of your cell and internet
costs are deductible; you may need to show a log to prove your business percentage. An office in
home expense may be deducted if there is an area that is used regularly and exclusively in your trade
or business to meet with clients, store inventory, or to prepare business paperwork. This area cannot
also be used as a living area, guest bedroom, etc. W-2s must be provided to employees by January 31
of the following year. Owners should not receive paychecks. Independent contractors receiving $600
or more must receive Form 1099-MISC by February 1
of the following year.
Signing below acknowledges receipt of this information:
Signature Date
Schedule C Engagement Letter Tax Year 2020
Thank you for using Tucson Tax Team for your tax preparation needs. Clear
communication is key to a successful business relationship. The purpose of this letter
is to ensure we share an understanding of the services we provide.