The main requirements of tax legislation relating to deductions, allowances and charges that a financial manager should know involve legislation maximizing tax deductions and minimizing tax obligations within the limits of the law.

Maximizing deductible business expenses is essential to minimize tax liability.

It is necessary to keep records of business expenses to help you claim tax credits and deductions. Tax law requires that for business expenses to be deductible, they must be both ordinary and necessary.

For example, keeping records of basic expenses necessary to manage things like office rent, salaries, equipment and supplies, telephone and utilities, etc.

Automobile mileage linked to the business is tax deductible, with the exception of commuting. An example could be a small business owner who traveled 2,000 miles at 0.205 per mile would earn a deduction of $ 410.

Reasonable entertainment and travel expenses must be deducted provided that the business took place or was discussed before or after the entertainment or during the entertainment. Careful records must be kept to substantiate the deductions.

Explanation:

Ordinary expenses are those which are current and accepted in business.

For the purposes of deductions, allowances and charges, business expenses are classified as expenses used to calculate COGs, capital expenses and personal expenses.

Expenses included in the cost of goods sold cannot be deducted as business expenses.

You cannot deduct your personal, subsistence or family expenses, but you can deduct part of your personal property used for business.

A good example is when you borrow money and use 70% for business while the remaining 30% for family vacations, 70% of the interest on the loan can be deducted from interest expense.

Deduct expenses for the professional use of your home, divide the expenses according to the actual mileage for the professional use of your car.

All deduct the salary you pay to employees, deduct rental costs only if the rent is for a property that you use in the business, deduct interest owed, deduct a certain number of federal, state, local taxes and foreign directly attributable to your trade as business expenses.

Also deduct insurance for your business or profession.