Owning a small business is not easy. Today’s business environment is more competitive than ever, as many small business owners are faced with significant challenges of keeping up with their competitors in an ever-changing business world.
With all that time you devote to finding the right business strategy, expanding your customer base and minimizing your losses, the arrival of tax season may come as an additional burden on your business routine. For both new and established small business owners, there’s always a danger of making tax mistakes, but the good part is that with a little caution you can easily learn how to avoid them.
We’ve prepared a list of top 3 of the most common tax mistakes you need to avoid.
Not Hiring an Accountant
If you are serious about doing business, the lack of professional help can hurt your efforts and divert your time from more important activities. You should always hire an accountant to help you out with your taxes because they understand how small business works and that gives you the always needed edge over your competitors.
In addition, an accountant will help you keep accurate records and reduce the possibility of making a mistake with your tax returns. Doing everything on your own, especially if you’re not prepared, can be a long and arduous process.
Finding the right tax professional can greatly benefit your business. Here are a few tips worth remembering before finding the best accountant who will take care of your best interests.
- Ask your friends, family members or colleagues for recommendations.
- Inquire about their experience and type of specialization.
- Be sure to ask them about fees.
- Find a tax attorney to help you out with legal matters. Den Hines is one of the best IRS tax attorneys in Ohio specializing in nationwide tax issues.
Not Separating Your Business from Personal Expenses
Many small business owners often make a mistake of not separating their business from personal finances. Basically, if your business is treated like a corporation, it is considered as an independent entity separate from any personal assets you might possess.
Moreover, if you fail to separate personal and business finances, you are at a risk of exposing yourself to creditors who may be able to lay claim to your assets.
Another beginner mistake you need to avoid is not having a separate business account. Remember to use your business account for paying only business-related expenses, because it will help you keep a clean record and make your job easier when preparing tax returns.
Failing to File On Time
Nobody likes filing tax returns. Despite this obvious fact, not filing on time or not filing at all is one of those common tax mistakes that you want to avoid. Also, for more tax advice, visit PKF Copper Parry.
Avoiding to file tax returns is not an excuse even if you can’t afford to pay in full. If that’s the case, the best solution is to pay the amount you can afford, to save you the trouble of paying penalties.
As advised by the IRS, you should always meet deadlines, whether you’re able to pay the entire sum or not. The IRS also recommends you pay as much as you can, though you should strive to pay the full balance to avoid any additional expenses.