Becoming a business owner is one of the most rewarding accomplishments you can achieve. However, you must earn the right to call yourself an entrepreneur every day.
Running a business of any size is no simple feat. From managing your employees to marketing your products and services, your plate is full.
Yet, you can’t allow yourself to fall short when it comes time to file your taxes. Common business tax preparation mistakes can end up costing you a lot of money.
You could be leaving viable business tax deductions on the table. Conversely, you could be making unsubstantiated claims that could trigger an IRS audit.
We want to help you avoid these outcomes. Keep reading for everything you need to know to avoid making mistakes when filing tax returns.
1. Not Keeping Detailed Records
One of the most detrimental business tax preparation mistakes is forgetting to catalog your expenses and revenue. You should be keeping detailed records of your cash flow all year round.
Unfortunately, many business owners don’t have the time or the skills to complete this task. If this sounds familiar, hire a bookkeeper to record your expenses and revenue so you’re better prepared for tax season.
2. Not Taking Advantage of Available Tax Credits and Write-Offs
As noted earlier, one of the most important aspects of filing taxes for businesses is knowing what you can and can’t write off. You need to understand what expenses you can use for business tax deductions.
By filing legitimate claims in terms of business costs, you can save a ridiculous amount of money or even get money back when filing tax returns. However, if you don’t know what you’re doing, you can also trigger an audit by trying to claim unqualified tax credits and deductions.
Click here to learn more about the process.
3. Waiting Too Long to File Your Taxes
Procrastinating is one of the most common business tax preparation mistakes. While we understand that you’re exceptionally busy, it’s never a good idea to put off filing your taxes.
First, waiting until the last minute to file all types of taxes can create unnecessary stress in your life. If you experience any setbacks during the process, you won’t have the necessary time to make adjustments.
Furthermore, there are fines and penalties for missing your tax payment deadlines. Why incur extra fees if you don’t have to?
4. Not Working With a CPA
Finally, filing business taxes is much more complicated than filing your regular income taxes. While you may have been able to handle your personal taxes on your own, it’s ill-advised to file your business taxes without the help of a CPA.
A professional accountant can help you ensure all of your bases are covered. They have the experience and expertise to identify viable business tax deductions you can claim without triggering an audit. They can also help you determine what your quarterly tax payments should be in the following year.
Are You Making Any of the Business Tax Preparation Mistakes Listed Above?
If you’re guilty of any of the business tax preparation mistakes listed in this article, hit the brakes. Avoid incurring fees or triggering an IRS audit, which will only make your life more difficult. The best solution is to work with a certified accountant.
And if you’re looking for more small business tips, look no further. Check out some of the other business-related articles on our blog to find more insight on how to become more successful.
