Fillable TAX YEAR 2021 SMALL BUSINESS CHECKLIST

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TAX YEAR 2021 SMALL BUSINESS CHECKLIST

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TIM KELLY & ASSOCIATES
ATTORNEYS AT LAW
7801 N. Pershing Avenue
Stockton, CA 95207-1749
Phone and FAX 800-259-3372
31TUwww.timkelly.comU31T
Timothy E. Kelly, Esq.†*
tim@timkelly.com 31T
31T
Kevin W. Rego, Esq.
LL.M.*kevin@timkelly.com 31T
31T
1T
31T
Lynn M. Kelly, Manager
lynn@timkelly.com 31T
31T
*Certified Specialist in Taxation Law,
State Bar of California Board of Legal
Specialization
†Also Licensed in Idaho, Illinois and
Texas
TAX YEAR 2021 SMALL BUSINESS CHECKLIST
SECTION A IDENTIFICATION
CLIENT(S) WHO ACTUALLY OPERATE BUSINESS
NAME OF BUSINESS (IF ANY)
ADDRESS OF BUSINESS (IF NOT HOME BASED)
FEDERAL TAX ID NUMBER (IF ANY)
TYPE OF BUSINESS
SECTION B GROSS INCOME OF THIS BUSINESS
P0F
1
P
SECTION C COST OF GOODS SOLD – We will calculate final COGS
P1F
2
P
OPENING INVENTORY
P2F
3
P
P3F
4
P
PURCHASES FOR RESALE- use your cost
WITHDRAWN FOR PERSONAL USE
WITHDRAWN FOR BUSINESS USE
OTHER EXPENSES RELATING TO INVENTORY ITEMS
CLOSING INVENTORY- lower of your cost or the
current market value. DO NOT use retail value.
1
If your business has no income, the burden on you will be to show you were actively
engaged in a trade or business. The IRS will otherwise presume you are not in business and
will not allow any expenses. If you have little or no income, and your expenses are high,
your audit risk is very great, and increases exponentially with the amount of loss reported.
2
This only applies to a business with an inventory. It does not apply to a business which
“drop ships” or to a service business.
3
Use closing inventory from 2020 Schedule C, or enter zero if business is new.
4
Other expenses relating to inventory products, such as shipping, packaging and insurance
GROSS SELF-EMPLOYMENT INCOME FROM ALL SOURCES
TOTAL REFUNDS TO CLIENTS AND CUSTOMERS
EMAIL TO lynn@timkelly.com
OR FAX TO 800-259-3372
Page 1 of 10
© 2021 TIMOTHY E KELLY, ESQ
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----Select One------
SECTION D GENERAL BUSINESS EXPENSES
ACCOUNTING (BOOKKEEPING – DO NOT INCLUDE OUR FEES)
ADVERTISING, MARKETING AND PROMOTIONS
BAD DEBTS
P4F
5
P
BANK FEES, CREDIT CARD FEES AND MERCHANT FEES
COMMISSIONS
P
12
P
INDEPENDENT CONTRACTORS
P5F
6
P
CONTRIBUTIONS AND DONATIONS
P6F
7
P
HEALTH & FRINGE BENEFITS FOR EMPLOYEES
P7F
8
P
ENTER ON SCHEDULE A
NOT DEDUCTIBLE
INSURANCE- GENERAL BUSINESS
INSURANCE- ERRORS & OMISSIONS
INSURANCE – WORKERS COMPENSATION
INSURANCE – LIFE OR DISABILITY
TOTAL INSURANCE
INTEREST – LINES OF CREDIT/CREDIT CARDS
INTEREST – MORTGAGE (NOT FOR HOME OFFICE)
P8F
9
P
JANITORIAL EXPENSE
P9F
10
P
LAUNDRY AND CLEANING
P10F
11
P
LEGAL AND PROFESSIONAL FEES (INCLUDING TAX FEES)
LICENSES AND PERMITS
5
Bad debts may only be deducted where the amount was originally included in income.
6
Must be supported by a Form 1099 you have issued where any individual is paid over $600
per year
7
If you are a service business, gift certificates for your services are not a deduction.
8
This includes EMPLOYEE health insurance, employee food served on your premises,
employee parties, awards, etc. This does not include health insurance for the business
owner.
9
This entry applies where you own your own office space outside of your home.
10
Office cleaning (but not for your home office)
11
This means dry cleaning of distinctive uniforms (clothing not suitable for street wear,
cleaning of towels/linen).
EMAIL TO lynn@timkelly.com
OR FAX TO 800-259-3372
Page 2 of 10
© 2021 TIMOTHY E KELLY, ESQ
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OFFICE EXPENSES
12
START UP EXPENSES- READ FOOTNOTE CAREFULLYP13 F
14
P
SUPPLIES (do not include inventory held for sale)
PAYROLL TAXES - COMPLETE WORKSHEET ON PAGE 7
TAXES – PROPERTY (NOT FOR HOME OFFICE)
11
P
P
TAXES- SALES TAX IF INCLUDED IN GROSS INCOME
12
This means expendable office supplies. Do not include capital assets, which are items
designed to last over a year and which exceed $300 in cost.
13
This would include an alarm at your separate office. Do not use this entry for a home
office.
14
Start up expenses are those expenses which would have been deductible if you were
actively engaged in a trade or business, but which were incurred before the start of
business. Examples include, education so long as it does not qualify you for the new trade
or business, travel, meals and entertainment, mileage, telephone, etc. Start up expenses
DO NOT include the purchase of any capital asset (see Section G of this checklist) as these
items are only considered placed into service after the actual start of business.
15
CAUTION – Include only employer portion of FICA and Medicare, plus Federal
Unemployment Tax (FUTA), State Unemployment (SUI) and State Training Tax (ETT). DO
NOT INCLUDE – any amount deducted from the employee’s wages, such as federal or state
withholding, employee share of FICA and Medicare, or California SDI. This information is
available from your payroll service. Be very careful here if you are not clear on what to
include. This has caused large audit adjustments in the past because of accuracy!
SELF-EMPLOYED HEALTH INSURANCE PREMIUMS
OUTSIDE SERVICES (PAID TO OTHER BUSINESSES)
POSTAGE
PRINTING AND COPY EXPENSE
PROFESSIONAL MEMBERSHIPS
RETIREMENT CONTRIBUTIONS FOR EMPLOYEES
RETIREMENT CONTRIBUTIONS FOR OWNER(S)
RENTAL OF VEHICLES, MACHINERY OR EQUIPMENT
RENTAL OF SPACE OR PROPERTY
REPAIRS
SECURITY
EMAIL TO lynn@timkelly.com
OR FAX TO 800-259-3372
Page 3 of 10
© 2021 TIMOTHY E KELLY, ESQ
$ 0
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COMMUNICATIONS - TELEPHONE
P15F
16
P-BUSINESS
(EXCEPT CELL PHONE)
COMMUNICATIONS
P16F
17
P-CELL PHONE
P18F
19
P
(BUSINESS USE PORTION ONLY)
COMMUNICATIONS – INTERNET
COMMUNICATIONS – OTHER
TOTAL COMMUNICATIONS
TOOLS AND TOOL MAINTENANCE
TRAVEL
18
P17F
ACTUAL AMOUNT OF TRAVEL MEALS
(MUST BE AWAY FROM HOME OVERNIGHT)
OR PER DIEM
P19F
20
P …….TO BE CALCULATED BY OUR FIRM – JUST COMPLETE CITIES AND
NIGHTS
CITY
NUMBER OF
NIGHTS
M&I RATE PER IRS
TOTAL
TOTAL USING PER DIEM METHOD
UNIFORMS (Clothing which is not suitable for street wear)
UTILITIES (NOT FOR HOME OFFICE)
21
P20 F P
WAGES PAID TO EMPLOYEES
16
Do not include basic home telephone service cost. Any communications related deduction
must be carefully supported to break out personal and business use.
17
As with all telephone expenses, this deduction must clearly break out business from
personal use. Do not just include 100% as it will damage your credibility in an audit.
18
DO NOT INCLUDE MEAL EXPENSES – Include airfare, hotel, rental car and local
transportation expenses. You must maintain a record of the reason for the travel, including
correspondence and conference information in order to establish the business purpose of
the travel. You must retain a copy of a receipt for any lodging expense.
19
You must have receipts for all expenses over $75. In addition, you must have a record
of
who, where, when, how much and thebusiness purpose of every expense.
20
For 2021 the “high-low” rates are $71/$60, respectively
21
This is for separate offices. For home office enter this in Section G.
EMAIL TO lynn@timkelly.com
OR FAX TO 800-259-3372
Page 4 of 10
© 2021 TIMOTHY E KELLY, ESQ
BUSINESS MEALS WITH CLIENTS
$ 0
$ 0.00
$ 0.00
$ 0.00
$ 0
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BOOKS, PUBLICATIONS AND MAGAZINES
CONTINUING EDUCATION
P21F
22
P
DEMO GOODS (NOT HELD FOR SALE)
P22F
23
P
GIFTS TO CLIENTS (LIMITED TO $25 PER PERSON)
ONLINE SUBSCRIPTIONS - PROFESSIONAL REFERENCE
SOFTWARE AND SOFTWARE SUPPORT
SECTION E OTHER BUSINESS EXPENSES
THOSE EXPENSES YOU ARE UNABLE TO CATEGORIZE ABOVE-THESE WILL BE LISTED AS “OTHER EXPENSES”
ALSO SEE SECTION I FOR CHILD CARE AND SECTION J FOR REAL ESTATE SALES EXPENSES
DESCRIPTION OF EXPENSE
AMOUNT OF EXPENSE
22
If there are travel expenses, list them separately under travel and meals-travel. To
substantiate continuing education keep all correspondence, confirmations and a copy of the
conference/educational program/class brochure or program.
23
Do not include any item already listed as withdrawn from inventory for business.
EMAIL TO lynn@timkelly.com
OR FAX TO 800-259-3372
Page 5 of 10
© 2021 TIMOTHY E KELLY, ESQ
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SECTION F VEHICLE EXPENSES
VEHICLE NUMBER
ONE
TO USE FLAT RATE MILEAGE COMPLETE
ONLY THE FIRST FIVE LINES
VEHICLE NUMBER
TWO
YEAR AND MAKE
TOTAL MILEAGE DURING THE YEAR FOR BUSINESS AND
PERSONAL REASONS –ALL MILES DRIVEN
TOTAL MILES DRIVEN FOR BUSINESS DURING THE
YEAR – BUSINESS MILES ONLY
DEDUCTIBLE DMV FEES (LABELED AS VEHICLE LICENSE
FEE
INTEREST PAID ON ANY LOANS SECURED BY
THE VEHICLE
TO USE THE OPTIONAL ACTUAL EXPENSES METHOD (REQUIRED FOR ANY VEHICLE YOU
HAVE ELECTED TO USE ACTUAL EXPENSES FOR IN A PRIOR YEAR), ALSO COMPLETE THE
BELOW QUESTIONS
DATE PLACED IN SERVICE
(ONLY REQUIRED FOR THE FIRST YEAR IN SERVICE)
LOWER OF COST OR VALUE ON DATE PLACED IN
SERVICE
TOTAL ANNUAL FUEL COST FOR ALL DRIVING
DO NOT ADJUST FOR BUSINESS MILEAGE!
TOTAL ANNUAL INSURANCE COST
TOTAL ANNUAL REPAIR & MAINTENANCE COST
OTHER EXPENSES (TIRES/CAR WASH, ETC.)
TOTAL DMV FEES
SECTION G TOTAL HOME OFFICE EXPENSES-
DO NOT ADJUST FOR BUSINESS RATIO –WE DO THAT!
DATE FIRST PLACED IN SERVICE (REQUIRED
ONLY FOR TH
E FIRST YEAR OR FOR NEW CLIENTS)
LOWER OF COST OR FAIR MARKET VALUE ON THE
DATE FIRST USED AS A HOME OFFICE (REQUIRED
ONLY FOR THE FIRST YEAR OR FOR NEW CLIENTS)
SIZE OF HOME OFFICE AREA IN SQUARE FEET
P23F
24
P
TOTAL LIVING AREA OF THE HOME IN SQ. FEET
P24F
25
P
FOR NON-OWNERS, ENTER TOTAL RENT FOR 2021
24
The home office area need not be an entire room, but nonetheless the area designated
must be used exclusively for the business and no other purpose. Storage space used for
inventory may be included, even if it is a garage or outside structure.
25
Do not include the garage unless the storage rule in the previous footnote applies.
EMAIL TO lynn@timkelly.com
OR FAX TO 800-259-3372
Page 6 of 10
© 2021 TIMOTHY E KELLY, ESQ
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TOTAL FLOOD AND HAZARD INSURANCE PAID
P25F
26
P
TOTAL ANNUAL UTILITIES PAIDP26F
27
P
TOTAL OF OTHER HOME RELATED EXPENSES
ANNUAL HOA DUES PAID
SECTION H CAPITAL EXPENDITURES A capital expenditure is any personal
property designed to last more than one year in service, and which costs more than $300.
DESCRIPTION
OF ITEM
DATE PLACED IN
SERVICE IN 2021
COST OF ITEM
26
Be sure to include any insurance premiums paid through a lender’s impound account.
27
Utilities include electric, gas, water, sewer, trash, cleaning, alarm and cable. Utilities DO
NOT include gardening, pool maintenance or home telephone line.
PAYROLL TAX
BREAKDOWN
WORKSHEET
CAUTION – Include only employer portion of the five taxes listed below. BE
SURE NOT TO INCLUDE – any amount deducted from the employee’s wages,
such as federal or state withholding, employee share of FICA and Medicare, or
California SDI. This information is available from your payroll service. Be very
careful here and ask for help if you are not clear on what to include.
FICA (Social Security Tax) - Employer's share only
Medicare Tax (Employer's share only
FUTA - Federal Unemployment Tax
SUI - State Unemployment Insurance tax
CTT - California Training Tax
TOTAL PAYROLL TAXES
EMAIL TO lynn@timkelly.com
OR FAX TO 800-259-3372
Page 7 of 10
© 2021 TIMOTHY E KELLY, ESQ
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SPECIALIZED SUPPLEMENTAL INFORMATION
SECTION I – CHILD CARE PROVIDERS ONLY
DAYS IN BUSINESS DURING THE YEAR
OR CHECK THE BOX FOR A FULL YEAR
OR
HOURS OPEN FOR BUSINESS IN 2021 INCLUDING PREP & CLEAN-UP
TOYS AND EQUIPMENT PURCHASED
P27F
28
P
EXTRA HOMEOWNERS/AUTO INSURANCE
*************************************************************************
FOOD – USING ACTUAL EXPENSE AND NOT THE PER DIEM METHOD
OR
FOOD USING IRS TIER I PER DIEM (YOU MUST KEEP A LOG OF MEALS SERVED)
MEAL
A
NUMBER OF MEALS
SERVED DURING THE
YEAR
B
PER DIEM RATE
A x B
TOTAL
BREAKFAST
$1.33 $
SNACK 1
$0.74 $
LUNCH
$2.49 $
SNACK 2
$0.74 $
DINNER
$2.49 $
SNACK 3
$0.74 $
TOTAL
$
28
Do not enter capital expenditures (anything lasting more than a year, such as a
computer),
here. Enter these items in Section G.
/ 365 DAYS
EMAIL TO lynn@timkelly.com
OR FAX TO 800-259-3372
Page 8 of 10
© 2021 TIMOTHY E KELLY, ESQ
0.00
0.00
0.00
0.00
0.00
0.00
0.00
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SECTION J REAL ESTATE SALES AGENT SUPPLEMENTAL EXPENSES
CAUTION: BE VERY CAREFUL WHEN REPORTING REAL ESTATE PROFESSIONAL EXPENSES.
DO NOT INCLUDE EXPENSES WHICH ARE DEDUCTED PRIOR TO THE PAYMENT OF THE
AMOUNTS REPORTED ON THE FORM 1099-MISC ISSUED BY YOUR BROKER(S). SINCE
THESE AMOUNTS HAVE ALREADY BEEN DEDUCTED FROM REPORTING INCOME,
DEDUCTING THEM A SECOND TIME MAY EXPOSE YOU TO SUBSTANTIAL TAX, PENALTY AND
INTEREST. ONLY EXPENSES PAID FOR BY YOU VIA CHECK OR CREDIT CARD COUNT AS
EXPENSES. DEDUCTIONS BY THE BROKER ARE ONLY DEDUCTIBLE IF THEY COME OUT OF
THE AMOUNT REPORTED ON THE BROKER FORM 1099.
PROFESSIONAL FEES (TOTAL COMBINED BOARD FEES)
MLS FEES (IF DIFFERENT THAN BOARD FEES)
BUYER ACCOMODATIONS
LOCKBOX EXPENSES
STAGING OR OPEN HOUSE EXPENSES
PHOTOGRAPHY EXPENSE
SECTION K ESTIMATED PAYMENTS MADE FOR THE 2021 TAX YEAR
EMAIL TO lynn@timkelly.com
OR FAX TO 800-259-3372
Page 9 of 10
© 2021 TIMOTHY E KELLY, ESQ
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IRS PAYMENT
DATE PAID TO IRS
STATE PAYMENT
DATE PAID-STATE
NOTES AND COMMENTS
EMAIL TO lynn@timkelly.com
OR FAX TO 800-259-3372
Page 10 of 10
© 2021 TIMOTHY E KELLY, ESQ
DO YOU WANT TO CONTRIBUTE TO A SEP-IRA?
IF YES, HOW MUCH?
DO YOU WANT A CONTRIBUTION DEADLINE
OF APRIL 15, 2022 OR OCTOBER 15, 2022?
YES NO
$___________
4/15/22 10/15/22
CIRCLE ONE
1. The maximum amount of SEP-IRA contribution is limited by net income. If your maximum
allowed is less than the amount you have requested, we will use the lower amount. If there is a loss
no SEP-IRA contribution is permitted.
2. Be aware the October 15, 2022 deadline will extend the IRS statute of limitations by six months.
3. In order to elect a deadline of October 15, 2022 to fund a SEP-IRA we must be notified before
the actual return is filed and before April 15, 2022.
or circle MAXIMUM
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TAX YEAR 2021 SMALL BUSINESS CHECKLIST

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Completed 26 March 2022

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