Common business tax mistakes
If you’re a small business owner, you may consider doing business taxes on your own vs. hiring a CPA as a cost-saving method. However, accidentally filling out forms incorrectly, violating tax codes, or failing to comply with tax laws are just some of the business tax mistakes that can leave your business open to costly IRS fees and penalties.
You could choose to use business tax software, but there are downsides to that including:
- Having the time available to fill everything out
- Help and FAQ pages aren’t always as helpful as you need them to be
- The software doesn’t catch input errors
- Some business tax software charge separately for each return
- Possible security risks
- Limitations for those businesses with multiple forms
Do these sound familiar?
Some avoidable common mistakes made by small business owners who prepare their own taxes include, but are not limited to:
- Failing to file or send in the proper forms and/or payments
- Underestimating and under reporting
- Mixing business and personal expenses
- Poor record-keeping practices and organization
- Not taking the proper deductions
Taking deductions that are not allowed is a red flag to the IRS and can trigger an audit with severe penalties if you are caught. Unfortunately, even taking legitimate deductions can trip you up if they are out of proportion with your income or with what a similarly-sized business in the same industry is claiming.
Could you have saved more?
Making business tax mistakes can have a real impact on your success as a small business owner. Why take chances? Sure, it’s tempting to take the less expensive way out and do your own taxes using some type of business tax software. But, you could end up misfiling your return or missing some major deductions because you didn’t know you qualified for them.
Whether filling your companies taxes annually or quarterly, hiring an accounting firm like GYL CPAs and Advisors will give you peace of mind knowing that your taxes are being filed correctly and on time.
GYL offers a variety of services for businesses, including accounting and tax services. In an effort to keep our clients informed on the various areas of their business, we prepare three levels of financial statements: audits, reviews, and compilations.
We also offer our clients on–site training for their personnel in the following areas:
- Accounting software
- Internal and reporting controls
- Customer service … and more