The new year comes with new opportunities, resolutions, and experiences. However, this is also the time of year when we must collect financial documents and file our taxes.
While this can come with valuable tax returns, filing taxes for businesses is also a lot of work. Furthermore, business tax laws are far more complex than personal income tax laws.
Making business tax preparation errors could have server consequences. You could leave thousands of dollars in unclaimed write-offs on the table or make a mistake that triggers an audit.
We don’t want either scenario to happen to you. Keep reading for four common business tax preparation errors you should avoid.
1. Filing Taxes for Businesses Without a CPA
If you’re a savvy entrepreneur it’s likely that you’re also self-motivated. Following the same line of thought, you’re probably used to handling everything yourself. This includes everything from home improvements to filing your personal income taxes.
However, when it comes to filing taxes for businesses, it’s highly recommended to use a certified business accountant. They’ve spent years in the industry studying tax laws.
This means they’re far more qualified than you are to file year-end taxes. As such, you can save tons of money by working with one of these professionals to help you with your business taxes. They can also help you avoid audits, penalties, and more.
2. Not Knowing What Business Tax Deductions You Can Claim
One of the most common business tax preparation errors is making invalid claims. Business owners often get confused about what does and doesn’t qualify as a business write-off.
Claiming false business tax deductions can create suspicion from the IRS, which may very well trigger an audit. An IRS business audit will create a lot of stress and inconvenience in your life. It might also result in any number of fines and penalties.
Click here to learn more about available tax deductions for your business.
3. Not Recording Your Revenue and Expenses
No matter how busy you are throughout the year, you must enforce the habit of documenting your income and expenses. Your cash flow reports are important for multiple reasons.
Aside from keeping yourself in the know regarding your financial status, this data is vital for filing tax returns. If you maintain this bookkeeping all year round, you can avoid a massive amount of work at the end of the year. More than likely, recording your cash flow on a weekly or monthly basis will also result in more accurate records.
4. Missing Tax Payment Deadlines
Finally, one of the most unnecessary business tax preparation errors is filing your taxes too late. Sometimes this happens because busy business owners get distracted with other obligations. Alternatively, you might just be procrastinating because you don’t want to do it.
In either case, filing your taxes late and missing tax payment deadlines can result in hefty fines and other penalties. We recommend implementing a little extra discipline to make sure these things get taken care of on time.
Don’t Make Costly Business Tax Preparation Errors
Are you at risk of committing any of the business tax preparation errors listed above? If so, take corrective actions immediately to save yourself time, money, and frustration. Once again we recommend working with a CPA to help you through the process.
And if you want more sound business advice, don’t go anywhere. While you’re here, take a look through the rest of our blog to find more articles that can help you make money, save money, and grow your business.