dealing with 2 businesses

[oceanlovin'ea]

Well, the thing that I have dreaded finally happened on the evening of April 15th. My mother only had one good eye. Her right eye sight was already gone because of wet macular degeneration. That night a blood vessel burst in her good (left) eye and so her sight is very bad. She can still live alone and take care of herself but she can't read or see anything close up unless it is in very large print. She is 92 so she says it was to be expected. She has a good attitude about it and is trying to do as well as she can.

She has a working business. She sells herbs and vitamins for Nature's Sunshine Products. She has been doing this since 1977. Her business is a s corporation and she has been paying me to do her bookkeeping all along.
Now I have to do all of the paperwork for her business. I have to take inventory, make deposits, prepare and mail monthly newsletters, do the orders, essentially everything that requires seeing what she is doing. She still is "in charge". She tells me what to order, she talks to the people and helps them make decisions about what they want to take. Sometimes I have to go to her house to meet customers so that I can write up the sales tickets. (some of her customers will just write up there own ticket and pay with a check so I don't have to meet them) So as you can see I am doing a lot more work for the business.

I was wondering about the mileage that I am accumulating running to her house. Do I consider bill her company for my miles and get reimbursed? Or do I consider it my business miles since I do receive payment from her? I could just charge her business more and then consider it my business miles, couldn't I?

I do want to be fair. Some of my trips are strictly personal trips to do things for her. Sometimes I have to do several things for her. For example, this morning I had to go out and help her get ready for a customer that is coming this afternoon. Then I took her to get a haircut and groceries. We take her car for those trips. So my mileage going out there had a multiple purpose.

Thanks for your ideas.

Linda, EA

[appelman]

First opinion.

I certainly sympathize with you regarding the problems of sorting out your mother's affairs. However, it seems to me that unless you are being paid for your time, your mileage is all personal.

[erchess]

Not so fast

Clearly if Linda is collecting from her mother the fee she would collect from an unrelated party for doing the same work then she has mileage that gets the same treatment as any other business mileage. In my opinion if Linda has been all along or is newly working for Mom for less than she would charge others for the same work then I don't know a cut and dried answer. I would personally treat "Mom Mileage" as business mileage but only for trips that were entirely devoted to providing tax services such as are provided to other clients. For example if several clients serve Linda beverages then Mom doing so is no problem but if no clients serve her meals then Mom doing so makes it a personal trip. I don't have a cite for this treatment and if the client were not my Mom I'd warn and document the warning that we might lose this on audit and I'd think about "Disclosing". But look at it this way - most of us from time to time discount our fees so we don't really charge everyone the same. It would never occur to anyone to go "ok I gave this customer a ten percent discount so I must knock ten percent off my mileage rate for the trip and some percentage of my toner costs for printing their stuff and so on."

Maybe I am wrong and maybe the fact this is Linda's mom means no discounts of any kind unless she treats the related mileage as personal but before I enforce that on myself or my clients I would have to see a cite. OTOH if this actually came up in my practice I'd ask here just as Linda did.

[S T]

Since Mom is an S-Corp - could S corp and Linda set up an accountable plan for Mileage and Reimbursements? Of course only for the MileageExpenses directly related to handling S corp affairs.

Sandy

[oceanlovin'ea]

paid well

She has always paid me well for my bookkeeping services. Last year she doubled what she paid me. So there is not discounts in payment for services.

Truth is that it is very hard to go out there and not end up doing something personal for her. Fixing tv control or gathering mail. Although that could be business, because there is always some business mail in with her personal mail. Since the corporation reimburses her for use of her home expenses paying electric bill can be a business expense.

I don't want to try to take more than I should but I feel like I should be able to count some of the mileage. For example, she needs postage stamps so I will make a run to the post office to get the stamps for her business. I will probably just go from my house since the post office is closer to me and the opposite direction from her. The next time I go out there I will take them to her.

oh, as a side point, I purchased a voice activated dialer for her. I ordered it online. I program it with the name and phone numbers of the people she calls the most. When she picks up the phone, it asks her who she wants to call. She says the name and it calls them. Isn't that cool!!!! The only drawback is that she has to remember how we put peoples names in the dialer. If names sound too much alike it won't recognize the second name and you have to come up with an acceptable name. But it is better than not being able to call anyone.
They have talking watches and clocks. Amazing what is out there.

Linda, EA

[JohnH]

I think you should maintain a log and just use good judgement on which trips you consider business & which are personal. Trips which are clearly personal should be noted on the log, but not considered business. Trips which are primarily business but which have some incidental personal component would still be business. Your situation requires some judgement, but a well-maintained log will be your best guide.

[oceanlovin'ea]

Thanks

I appreciate your input. I will keep a daily log of my trips and what I do. This is going to be a challenge for me. I have and want to keep my business going. I love my clients and don't intend to quit. But when my mom is gone, her business is mine too. And it has a nice monthly income as long as we keep communicating with the downline and keep it going. I can't let that go down the drain either. At some point, when my mom is not involved, I will probably have my daughter helping me with that business. But she has to learn first and right now she doesn't have the time or energy to do it. But that is down the road. Like Scarlet, I'll think about it tomorrow.

Linda, EA

[MAJ]

Paid -?? Your business mileage

As long as you are doing 'something' for the business I am sure you can write if off on your end.
As for Log - YES SIR - Put the Free Hallmark Calendar in the car door. Been doing that for 20 years.
Always write done the details.. Where, Gas, mileage, repairs, etc. Great habbit...
That is - Until your son gets his license and does nothing !!! Wait - wrong thread...

I'm sure we're not talking too many THOUSANDS of miles, right?

[oceanlovin'ea]

miles

it is 3.5 miles from my house to her house so a total of 7 miles round trip. Even if I went every day that is only 2500 miles for the year.And I don't go every day.

So I will keep a log. Started back tracking it till last month as best I can remember.

Linda, EA

[Lion]

Mom's business location is at HER house, right? So, when you go to work for her, isn't it nondeductible commuting? Are you her employee? If your work for her is part of your tax and bookkeeping business, are you yourself an independent contractor (can you send your daughter or someone else on your payroll to pick up her stamps?) or is her business hiring your business? In that case, wouldn't you be working from your home office and still have no business mileage? Or, is she herself hiring you as an individual to drive her to the doctors', pick up stamps, etc.? Or, some combination of all three? I think you have to track separately your various types of trips before you can ask advice on how to treat them.

[JohnH]

I deduct all the mileage from my office to my clients' locations, to the post office, to the office supply, etc. It isn't commuting when I drive from my office to any other business location. I see this situation as identical, except for the fact that it's mom and thus it might be wise to keep thorough records of both business AND non-business trips out of an abundance of caution.

[Lion]

But, Linda said she has two businesses. She has her own business (Sch C or another entity?) and works for her mom (W-2?). So, to deduct business mileage while working for her mom's business, she needs to first identity when she reports that business income. If mom reports Linda's wages on a W-2, Linda will deduct qualified expenses on F 2106 and not lump them in with her tax prep expenses on her own business return. If mom gives Linda F 1099-MISC, does Linda include that income with her tax prep business or with her second business selling herbs and spices?

[JohnH]

OK, I see what you mean.
I just assumed Linda's mom was paying her as an independent contractor.

[taxea]

As an IC for mom with the bookkeeping then the mileage attached to that is deductible on the 2nd Sch C...if she had included it as other income on her tax business (as related business) then the additional work is an extension of that IC work and the mileage would be deductible.
As a W2 it would be a 2106 expense.

[oceanlovin'ea]

Mom has an s corporation and she sells herbs and vitamins. I have a sole proprietorship and do tax returns and bookkeeping. I don't have 2 businesses. (Although in the future when she dies, I will have 2 businesses) She hires my business as an independent contractor to do her bookkeeping and related things. So when I go to do something for her business I am going to her location just like I would go to any other clients location. It is deductible mileage.

I am just doing a lot more than I used to do so I was just trying to figure out the best way to keep track and get my mileage taken care of. I know one man in Tampa who goes to some of his clients offices 3 or 4 times a week. It is all deductible mileage for him so it should be for me too.

Not sure why a second schedule C would be needed. I would only be deducting the mileage for business related trips to her house.

Hope that clears up the mud a little bit for some of you.

Linda, EA