Every business has to pay their taxes. What’s more, tax is such a heavily regulated and closely watched part of business law that you want to make sure that you’re doing it correctly.
It’s easy to make certain tax mistakes, whether it’s by trying to find some wiggle room in how much you have to pay, misunderstanding certain parts of your tax obligations, or simply being unaware of some of them.
Here, we’re going to take a look at some of the most common tax mistakes that small business owners tend to make and what you can do to avoid them.
Not having an accountant on your side.
You want to make sure that you file your taxes correctly, and having the right accounting professional on your side can make that a lot easier. Note, that having a bookkeeper may not be enough. They can certainly help you keep your books updated and ready, and only a tax accountant can legally offer advice on how you can file your taxes and do the legwork of it themselves. Furthermore, they can help you utilize different strategies to manage your tax burden while still ensuring that you remain compliant, so be sure to get them on board.
Register your business’s tax number.
An all too common mistake with new business owners starting their first business is believing that registering the business is enough. Simply put, it isn’t. On top of that, small businesses need a federal tax ID number. Although the EIN, or Employer Identification Number, makes some reference to being an employer, you still need to ensure that you have your number even if you don’t have employees. It’s essential for identifying that it is your business’s taxes that you are filing and is often required for things like acquiring loans and opening bank accounts.
Keep your expenses together
One lesson to be learned is that the sooner you separate your personal and business finances, the less of a headache they will be for you. When running a small business, or even working as a sole proprietorship, it might seem more convenient to keep things in one account. However, this can make it difficult for the IRS to pick apart what is a personal expense and what is a business expense, and this can cause them to look at you with more scrutiny, which you don’t need. Open a business bank account for your peace of mind.
Making every deduction possible.
You are naturally going to want to save money, and one of the ways you might do that is by taking advantage of what deductions you can. However, if you try to make all the deductions you can, you might end up going over deduction limitations, which can see you paying more in the end.
The above mistakes aren’t the only errors you can make while filing your taxes. Make sure that you do your research further, preferably with the help of a tax professional, to ensure that you’re staying on the straight and narrow. No one wants the tax man to come after them, after all.
