As a business owner, one time of the year that you might not look forward to is tax time. After all, not only do you probably not want to have to pay in any taxes, but you might be a bit stressed out about the whole process of filling out and filing your tax forms.
This isn’t uncommon, and a lot of small business owners make a lot of mistakes when filling out their tax forms. These are a few of the most common tax mistakes that many small businesses make and that you should look out for.
1. Not Keeping Accurate Records
When you’re busy with all of the various aspects of running your business, it can be easy to forget about things like documenting expenses and filing away receipts. However, this can really come back to bite you at tax time. For one thing, you want to make sure that you keep track of all of your expenses so that you can get all of the deductions that you qualify for.
Additionally, you need to have proof of your expenses just in case you are audited. This isn’t something that you can make up for right before tax season, although it does pay to try to gather up as much information as possible before filing your taxes.
For the next tax year, try to do what you can to keep good, accurate records of all of the expenses that your company incurs and all of the profits that you make so that you can make next year’s tax season a whole lot easier.
2. Doing it All Yourself
Nowadays, so many people are doing their own taxes. After all, some forms are relatively simple to fill out, and there are a lot of software programs on the market that can be used for filing your taxes yourself. This can be a good option for some individuals, particularly those who don’t have a very complicated tax return. However, if you are a business owner, chances are good that you should not be doing your taxes yourself.
First of all, tax forms for businesses, even small ones, can be much more complicated. Plus, there are many different types of deductions and credits that you might qualify for but that you might not even know anything about. If you try to do your taxes on your own, you might miss out on some of these things and end up overpaying, or you could fill out your paperwork wrong and end up in trouble with the IRS or with your state tax office.
By hiring a professional who has experience in handling small business taxes, however, you can help prevent these problems and can take a lot of stress off of yourself during tax season as well.
3. Not Covering All Of Your Tax Responsibilities
Many people think about filing a federal tax return when they think about filing their taxes. However, you may also have a tax obligation to your state government. It is essential to ensure that you are filling out all of the proper forms and that you are paying all of the taxes that you are responsible for if you don’t want to face problems later on.
4. Not Filing On Time
You might have heard that you can file for an extension on your tax return. This can be an option if you need more time, but you shouldn’t do it unless you have to. This is because you may still have to pay penalties and interest for filing late, even if you get an extension.
You also shouldn’t wait until the last minute to file your taxes. Instead, get started on your taxes as soon as possible so that you have ample time to get them finished before the deadline.
As you can see, there are a few common tax mistakes that many small businesses make. If you are concerned about your taxes, consider working with an accountant or another tax preparation professional who has experience in helping business owners like you.
Then, you can help avoid these major mistakes and can help ensure that your taxes are done as they are supposed to. This can save you a lot of headaches in the long run.
Author: Emily McCartney writes for WooHoo Tax. They’re your friendly tax experts, here to help you get your overpaid tax back from the Government to where it belongs – in your pocket! And make sure any tax returns are filed correctly and up to date with HMRC. Follow them @woohootax on Twitter and @woohoo.tax on Facebook.