What should go under “Other Expenses” ?

April 9, 2007 by Dan White.

Dear Editor,

What is your suggestions as to when to use the catch all category called ‘other expenses’ in the BKS.

SL

Dear SL,

This brings up the same topic we were involved with in regards to “petty cash.”
 

While the category is a good catch all… it needs to be outlined “How to Minimize, ‘other’  in the training manual add on…(because in reality there is no such expense as ‘other’ therefore all other expenses have to be moved to something other than other… J having fun with words… sorry..
 

E.G… Actors clothes could be called ‘Business Supplies.’ There could be a number of items in this particular category… Face powder, makeup, costume jewellery, hair styling,,, etc… Our argument is that actors have to buy attire that they don’t use in their personal lives, they have to make themselves look differently, therefore there is no personal benefit. (And yes I know people have been doing this for years, but that is like a fishing lure when fishing for a spouse. Fishing is not tax deductable unless you are doing it for a living. Not that some people don’t go looking for a spouse to support them,,,, for a living so to speak…. which would make spouse hunting tax deductable…. just having fun here…. J
 

In the end with a properly completed BKS, there should be nothing left in either ‘petty cash’ or the ‘other category.’
 

Because we are training the Bookkeepers to know where things should go, it reduces the required time for the tax preparer to do a tax return.
There will be less modifications to the BKS… Ideally there would be no BKS adjustments and the data would just go straight to the corresponding category in the T2124 Business Activity Form.  To get the BKS to this state of perfection is our goal.
 

To keep petty cash and other to zero amounts, would be one more item in audit risk protection.
Dan

Posted in Tax Tips | Print | No Comments »