There are over 600,000 new companies formed in the United States every year. Interestingly, many people are unaware of the fact that many of these companies fail.
As you might guess, one of the most important responsibilities that you have as a business owner is tax planning. It should come as no surprise that failing to pay business tax will result in a large number of consequences, such as fines or fees.
We’ve put together a brief guide about business tax resolution that can help ensure that you handle your taxes appropriately. Let’s take a look at everything you need to know about common tax mistakes entrepreneurs make when tax filing.
1. Filing on the Wrong Date
Many business owners assume that their taxes will always be due on the 15th day of the last month of each quarter. However, that’s not always the case. The date that you file your taxes can actually change depending on the year.
For example, a federal holiday will push the date back. In addition, if you’re a first-time filer, you might get an extension.
2. Not Knowing Which Expenses Are Tax-Deductible
As a business owner, it’s important to be aware of what constitutes a tax deduction.
Many common business expenses can actually be deducted from your taxes. These include things like office supplies, travel expenses, and marketing costs.
3. Not Keeping Accurate Records
This is one of the most common tax mistakes made by business owners. It’s important to keep accurate records of all your business income and expenses.
This will make it much easier to file your taxes and ensure that you get the most accurate deduction. In some cases, you could save thousands of dollars.
4. Filing With the Wrong Information
When you’re preparing your taxes, be sure to use the most up-to-date information. This includes things like your business address, contact information, and bank account numbers.
Using outdated information can result in delays or errors in your tax return. The IRS may also not accept the documents that you submit, leaving you responsible to file at a later date and incur penalties.
5. Not Including Early Withdrawals From Retirement Accounts
If you’ve made any early withdrawals from your retirement accounts, be sure to include them on your tax return. This includes things like 401(k)s and IRAs.
Not including these can result in penalties or fees. This is something to keep in mind, as you will already have to pay a fee if you withdraw early from accounts of this type.
6. Not Reporting Crypto Transactions
If you’ve made any cryptocurrency transactions, be sure to report them on your taxes.
This includes things like buying, selling, or exchanging Bitcoin or other digital currencies. So, be sure that you keep this in mind when moving forward — it could come back to haunt you in the future.
7. Not Filing a Return at All
One of the worst things that you can do is fail to file a return at all. This will result in penalties, fees, and interest. In addition, you may end up owing money to the IRS.
So, it’s important to make sure that you file your taxes on time, every time. If the IRS decides to audit your business, this will take time away from running a company and require you to gather a large amount of documentation.
8. Incorrect Calculations
Interestingly, this is more common than many people expect.
In other words, business owners often make math errors when preparing their taxes. This can happen for a variety of reasons, such as not knowing the tax laws or simply human error. In any case, it’s important to be extra careful when preparing your taxes to avoid making any mistakes.
How Can Working With Professional Tax Services Help?
Primarily, they can help you stay up-to-date on the latest changes in tax law.
This way, you won’t have to worry about filing your taxes on the wrong date or using outdated information. In addition, a tax professional can help you take advantage of deductions that you might not be aware of.
They can also help you keep accurate records and avoid making errors that could cause complications later on.
What Should I Look For in a Tax Professional?
The person or firm that you work with should have a substantial amount of experience working with businesses like yours. They should also be up-to-date on the latest changes in tax law.
You’ll want to make sure that they’re someone that you feel comfortable working with. After all, you’ll be sharing a lot of personal information with them. So, it’s important to find someone who you can trust.
If you’re having difficulty choosing someone, take some time to research the feedback that their past clients have given. This will provide insight into what experience you will get from working with them.
Of course, you should also keep an eye out for feedback that is not legitimate. Understanding how to recognize fake reviews can go a long way.
Handling Business Taxes Doesn’t Have to Be Difficult
As long as you take advantage of professional tax services, you can avoid making common mistakes. This will save you time, money, and hassle in the long run. So, don’t wait to get started — find a tax professional that you can trust today.
Want to learn more about what we can do? Be sure to reach out to us today and see how we can help you.