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How to avoid common tax mistakes for small businesses

On Behalf of | Jan 15, 2019 | Firm News

No one likes paying taxes, especially when a business is involved. Taxes are complicated enough without adding in all the regulations for companies and corporations. It can be easy to be sloppy or confused as you work on business taxes.

You can lighten your burden and prevent mistakes by following these tips. The extra effort will pay off in the long run.

Know what you owe

In an effort to be safe instead of sorry, you may pay more than what you owe, a common mistake for up to 93 percent of small-business owners, says Entrepreneur. Find out exactly what you owe to avoid over- or underpaying.

Stay up-to-date on deductions

To help you know what to pay, make sure you also know what you can and cannot deduct. For example, entertainment for clients no longer qualifies, but new equipment for your business does. Take advantage of all the deductions you qualify for to save money and avoid writing off too much to prevent an audit.

Look at the bigger picture

Savings are helpful, but base business decisions on more than just tax advantages. What may save you money now can cost you later. Review your options with a tax planner before choosing.

Pay on time

Paying on time is the easiest way to stay out of trouble with the IRS, yet many fail to do so. Start early in preparing your taxes so you can catch issues in time to fix them and turn in any last-minute documentation before the deadline.

Keep accurate, current records

It is normal to feel overwhelmed and busy with all the aspects of running a business. One task you cannot overlook, however, is keeping accurate and current records. The quality of your bookkeeping influences how smoothly and quickly your tax preparation goes. Unless you have the time and experience, it is best to have a professional take care of financial records to minimize errors.