The key to staying out of the IRSs grasp and still using your entertainment business expenses to your best interests is to be organized about them. When the IRS begins to look at the expenses related to your business that you have written off, entertainment is one of the most likely targets they will hit on. Many write off expenses here that are not legit.
Remember that you can write off 50 percent of entertainment costs for your businesses in terms of impressing the client or other such activities. Yet, the burden of proof is on you. This means that if you take them out, you need to walk home with a receipt in hand. And, you must show that it was somehow related to your business. The best way to do this is to keep a business guest list and records of when, where and why you went out to dinner. Then, include the relationship with the person. This way, you clearly show why this is a legitimate business expense.
