INTRODUCTION

This Manual references various Forms and Publications available from the Internal
Revenue Service (IRS) and the State of Arizona. These Forms and Publications may
be obtained from your Local Offices . Also, nothing in this Manual is intended to
replace competent professional help from your Bookkeeper, Accountant, or Tax
Advisor. Al h ugh Jani-King has made every effort to be as current and accurate as
possible with t 1s information, it should be noted by the reader that Tax Laws do
change from time to time, and special situations may exist that could alter the accuracy
of the information
p resented. As with all Tax Laws, it is your responsibility as a Franchisee to keep
abreast of all changes made. It is advisable to consult an Account or Small Business
Advisor.

ACCURATE RECORDS

Maintaining accurate records of all possible business related deductible expenses is an

important function that all business owners must learn to perform. Accurate record
keeping can substantially lessen the tax burden at the end of the year. Accuracy can
only be assured by utilizing proper documentation procedures relating to expenditures
such as cash receipts, cancelled checks, daily mileage records, petty cash vouchers,
etc. Properly completed expense documentation must be retained and must match
bookkeeping expense entries. Some deductions which may be claimed by you include
most insurance premiums, duplication of keys, uniforms, advertising, -- .
office supplies, printing, interest expenses, repair costs, owned . . .
equipment depreciation, Employer taxes, rental expenses, royalties . • •.
to Jani-King, business fees or commissions, salaries and wages to
Employees, etc. ·

Three very helpful publications that are available for free are: Your Federal Income
Tax, Publication 17; and Tax Guide for Small Business Publication 3344, PAU-005
Arizona Employer's Handbook. It is also advisable to consult an Accountant or Small
Business Advisor. There are penalties assessed for non-compliance with Tax Laws.

TYPES OF BUSINESS STRUCTURES

When beginning a business, you must decide which type of business entity to use.
Legal and Tax considerations enter into this decision. However, legal considerations
are beyond the scope of this publication. Normally, you conduct a business in the form
of a Sole Proprietorship, Partnership, Corporation, or Limited Liability Company. If your
business is a Sole Proprietorship, Partnership, Limited Liability Company (LLC), the
business itself does not pay Income Tax. The Sole Proprietor, LLC, or the Partners
include the profit or loss on their personal Tax Returns. The profit of a Corporation,
except for an S Corporation, is taxed both to the Corporation and the Shareholders

©JANI-KING SOUTHWEST EXHIBIT I Page 1 Revised April 2006

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