Avoid These Common Small Business Tax Mistakes
When you run your own business, it is important that you have all your affairs in order, including your taxes. If you aren't doing your taxes properly, it could be costing you money and increase the risk of getting an audit done later down the road. Here are some common small business tax mistakes people tend to make that you need to try and avoid.
Failing to List All Your Deductions
A very common mistake made by small business owners who are new to filing taxes is not listing your deductions. Sure, you probably listed the brand new computer for your office and the amount you pay for your rental space, but there are a lot more deductions you might be able to include when filing your taxes. For example, you might not make deliveries with your vehicle, but if you drive to meet clients, pick up supplies for your office, or go to the post office for work duties, those are considered business errands. You may be able to deduct the cost of gas for these trips. Some other smaller deductions not to forget about include buying office supplies, paying for internet in your office space, or any classes or software you purchased to help grow your business.
Having Inadequate Record-Keeping Methods
As a small business owner, you should be extremely organized, including with keeping records. This might not cause you to mess up your business taxes, but it makes it a lot more difficult every time tax season rolls around. Make sure you are up-to-date on your records, including payroll information, credit card and check payments, petty cash information, and receipts for all business goods you purchased. If you do this, by the time you need to file your taxes, everything is easy to access. This is helpful whether filing your own taxes or having them done by a professional.
Combining Personal and Business Taxes
Just because you run a small business, even possibly out of your home, doesn't mean you should combine your business and personal taxes. In fact, this puts your personal assets at jeopardy in case there are issues with your taxes or the amount you owe the government. You should have everything separate from your personal life, including a business checking and savings account, business tax records, and business deductions.
Not Hiring an Accountant
It is highly recommended that you get assistance from tax accountants. They are excellent at looking at your records, finding the most deductions possible, and filing on time. There are no added worries of audits, over or under-paying taxes, or missing deadlines.