When you run a business, you are responsible for maintaining financial records and filing taxes every quarter or on an annual basis. Unfortunately, people new to filling taxes make a variety of different mistakes. Here are some common mistakes to make sure you avoid in the future.
Not Paying Self-Employment Taxes
The first business tax filing mistake has to do with people who are self-employed with a low profit during the year. Even if you earn a small amount each year, you will likely still need to file your taxes. Don't assume because you aren't pulling in a full-time wage with your home-based business it means you don't have to file any taxes. Consult a tax accountant or the IRS directly to find out the minimum amount requiring filing taxes with self-employment.
Failing to Claim the Right Deductions
When it comes to deductions, you need to know which ones apply to your business taxes, and which ones should be avoided. If you try to claim too much, you could end up with a declined tax return or audit. On the other hand, you might end up paying more than necessary if you don't keep your receipts and claim the right things. While you should talk to an accountant for specifics, some common deductions for businesses include your office or rental space, office equipment and furniture, utilities related to your business Internet or cell phone, and gas used to meet customers or clients.
Making Mistakes With Your Payroll
If you have employees working for you, it is essential that you have the payroll filed correctly. If you have enter the right deductions, take too much or too little out for taxes, or you don't enter overtime correctly for your employees, it not only affects their checks, but your business as well. When tax information is incorrect with your payroll, you are the one that ends up paying for it with various penalties. It is best to hire a professional if you are not 100 percent sure how to enter payroll information.
Assuming You Don't Need an Accountant
Unless you have gone to school to learn about business taxes and payroll, make sure you hire an accountant that specializes in business-related taxes. Not only did they go to school to learn proper tax filing and deductions, but they keep up on changes with IRS rates and filing rules. It gives you peace of mind knowing your taxes are taken care of properly, and gives you more time and energy to work on other aspects of your business. For more information on tax preparation, contact a company like HBE Becker Meyer Love LLP.