As Small business owners sometimes we wear many different hats while running the business.
You may not exactly have the knowledge and expertise in accounting and tax but nevertheless
it’s an important part of having a business of any kind. Filing your taxes for state, local and
federal is required if you want to remain in good standing and not suffer financial set backs with
penalties, interest and fines.
During tax season you may opt to put on your tax hat and do your taxes on your own which
could leave you susceptible to mistakes .
Accidentally failing to comply with tax laws, violating tax codes, or filling out forms incorrectly
can leave you and your businesses open to possible penalties. The IRS encourages small
businesses to explore using a reputable tax preparer– including certified public
accountants, enrolled agents or other knowledgeable tax professionals to help with your tax
situation. Filing electronically can also help avoid common errors.
Here are a few mistakes small business owners should avoid:
1. Underpaying estimated taxes
Business owners should generally make estimated tax payments if they expect to owe tax of
$1,000 or more when their return is filed. If you don’t pay enough tax through withholding and
estimated tax payments, you may be charged a penalty.
2. Depositing employment taxes
Business owners with employees are expected to deposit taxes they withhold, plus the
employer’s share of those taxes, through electronic fund transfers. If those taxes are not deposited
correctly and on time, the business owner may be charged a penalty.
3. Filing late
Just like individual returns, business tax returns must be filed in a timely manner. To avoid late
filing penalties, taxpayers should be aware of all tax requirements for their type of business the
4. Not separating business and personal expenses
It can be tempting to use one credit card for all expenses especially if the business is a sole
proprietorship. Doing so can make it very hard to tell legitimate business expenses from personal
ones. This could cause errors when claiming deductions and become a problem if the taxpayer or
their business is ever audited.”
The key to reporting accurate data on time is having your books and supporting documentation in
order so you can be ready at any time for an audit and also you don’t want to pay more than
what’s required in taxes. Keeping up with your business finances should be a priority because
not doing so can have some unfavorable financial and tax consequences.
Contact us today to schedule a strategy session to address your business finances.
Give us a call, let’s talk.
Stellar Ledgers is more than a bookkeeping service, we have the expertise to provide value-added feedback and advice on the financial health of your business and this data is so vital that with it can sustain your growth or without it can lead to insolvency.