Are you a small business owner looking to make sure your taxes are done correctly? Tax time can be a stressful and confusing process, but it’s also one of the most important times for business owners. Mistakes can be costly, so it’s essential to understand the common tax mistakes made by small business owners and how to avoid them.
At Rosenthal & Kaplin, we want to help make sure your taxes are done correctly and that you don’t end up with any unexpected surprises. Here are the top 10 common tax mistakes made by small business owners and how to avoid them:
1. Not Keeping Accurate Records: As a small business owner, it’s essential to keep accurate records of all transactions. Tracking payroll, inventory, expenses, and income is key to filing complete and accurate tax returns. Failing to keep accurate records can result in incorrect or incomplete tax returns, which can lead to costly penalties and interest.
2. Not Filing Taxes on Time: As a small business owner, it’s essential to meet the deadlines for filing taxes. Filing your taxes late can lead to costly penalties and interest, so make sure to plan ahead and file your taxes on time.
3. Not Claiming All Available Deductions: Many small business owners don’t take full advantage of all available deductions, which can result in an increased tax burden. It’s important to understand all of the deductions that are available to small business owners and to take advantage of them.
4. Not Knowing the Tax Laws: It’s essential for small business owners to understand the tax laws that apply to their businesses. Not knowing the tax laws can lead to incorrect filing, which can result in costly penalties and interest.
5. Not Consulting with a Professional: While it’s possible for small business owners to do their own taxes, it’s important to consult with a professional to make sure that everything is done correctly. A professional can also help to identify deductions and credits that may not be available to the average business owner.
6. Not Understanding the Tax Implications of Hiring Employees: Hiring employees can have a big impact on taxes, so it’s important to understand the implications before you make the decision to hire.
7. Not Paying Estimated Taxes: Many small business owners don’t realize that they need to pay estimated taxes throughout the year, not just when their taxes are due. This can lead to an unexpected tax bill at the end of the year.
8. Not Updating Tax Strategies: Small business owners should regularly review their tax strategies to make sure they are taking full advantage of available deductions and credits.
9. Not Taking Advantage of Retirement Plans: It’s important to take advantage of retirement plans, as they can provide significant tax savings.
10. Not Separating Business and Personal Expenses: Business owners should always make sure to separate business and personal expenses, as this can help to simplify the filing process and potentially save money.
Taxes can be confusing, but they don’t have to be. By understanding the common tax mistakes made by small business owners and how to avoid them, you can make sure that your taxes are done correctly and that you don’t end up with any unexpected surprises. Need help? Give us a call – we’d be happy to help
