Most business owners would agree that getting their taxes in order is a great challenge. With all the other important aspects of your business that you need to look into, it's easy to make slip-ups and commit tax mistakes. Here are some of the most common mistakes that business owners commit when it comes to their taxes, as well as the simple and practical ways to avoid them.
1. Combining business and personal expenses.
When you're pressed for time, slumping personal and business finances together seem convenient. But in the long run, you will realize that this is not the case. Combining business and personal expenses takes more time from you to identify which are business and personal not to mention missing business expense. It also complicates the preparation of your financial records for tax reporting, it also sends a red flag to the IRS.
To avoid getting in trouble with the IRS, take the time to separate your business and personal expenses. To start with, use a separate bank account and credit card for business and personal expenses. Finally, make sure you have accurate financial records.
2. Choosing the wrong business structure.
The type of business structure that your business belongs to makes a difference on your tax bill. To keep away from these problems, it is wise to choose the most appropriate business structure for your business. Being in-the-know about business structures can help you make informed decisions on this matter.
3. Missing the deadline.
Since planning and mapping out how to file and pay for your taxes take a lot of time, some business owners opt to do it at the last minute. When this happens, they either make data entry mistakes because of time constraints or worse, they miss the deadline. Either of these two brings an utmost inconvenience to business owners, so the best thing to do is to file before the deadline set by the IRS.
Yes, planning your taxes and settling them on time involves going into a lot of nitty-gritty details. Can you really get them done on your own? Probably not. To make sure that everything is right on track, it is best to seek the help of professionals.
We help you plan, forecast and analyze your financial data
so you can get on top of your finances today to grow your
small business big tomorrow.
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