The Most Common Tax Filing Mistakes Business Owners Make & How to Avoid Them

The Most Common Tax Filing Mistakes Business Owners Make & How to Avoid Them

a calculator and pencil on some tax formsMost small business owners don’t pay enough attention to their taxes because they’re focused on attracting new customers and generating sales. The only time taxes are important is during tax time. You’ll see business owners stressing over their tax issues and messing their filing up, which has dire consequences.

As a small business owner, the last thing you want is an IRS audit. Therefore, it is important to hire a professional tax filing service. However, you should understand the tax filing process and be aware of common mistakes.

Business Structure Issues

One mistake business owners make when starting their business is choosing the wrong business structure. To kickstart their organization, they hastily tick the wrong box on the business registration forms without understanding the legal consequences and tax liabilities associated with each structure. They realize their mistake when they file their taxes or approach a bank for a loan.

It is crucial to understand the various legal and tax complexities associated with different business structures to avoid such consequences. Consult with a professional tax service who can guide you in choosing the right structure for your business.

Deadlines

As mentioned, taxes are not important for small business owners as they have a million other things to do. In such a scenario, there is a high chance that you may miss your tax filing deadline.

Failure to pay your taxes on time can lead to an IRS audit and potential penalties. Such a mistake is easily avoidable, as you can set up reminders on your calendar for tax filing deadlines or get the help of professional tax services, who can file taxes on your behalf.

a light board saying taxes on the top of US dollarsTracking Expenses

As a small business owner, you might struggle to keep a record of your expenses. This is common in small businesses that do manual bookkeeping and don’t use integrated accounting software. Keeping a record of your business expenses, saving every receipt, and tracking business mileage can be hard, especially if you have a million things going on simultaneously.

Therefore, it is important to use an integrated software that automatically tracks your expenses or consider hiring professional bookkeeping services to cover all your accounting needs.

Even though you’re required to file your taxes only once a year, the entire process is complex and needs adequate attention and time. If you’re unable to devote regular attention to your taxes, then consider hiring professional tax compliance services such as Ally Books and Taxes to streamline your filing process.

They provide professional payroll, accounting, and Professional Tax filing Services to small businesses and can even help you with business consulting and create solid business plans. You can visit their website to learn more about their services or contact them for a consultation.

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