Common Tax Mistakes

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Common Tax Mistakes That Trip up Small Businesses and How To Avoid Them

Whether you’re an online-only business or work as a freelancer, the last thing you want to experience is a call from the IRS. Not only can it be incredibly daunting to deal with tax-related issues, it could potentially stall your business if you aren’t dealing with it correctly. Sadly, it’s fairly common for new business owners to run into issues regarding their taxes.

They might not understand how to calculate what they owe, or they might be unsure of the processes involved in dealing with their own taxes. So let’s take a look at some of the top mistakes people make when it comes to small businesses and their tax responsibilities.

Common Tax Mistakes


Should you contact an expert?

Before we start, it’s worth mentioning that if you’re already in trouble due to tax-related issues, you should seek IRS problems resolutions services immediately. The tips below will help prevent tax-related issues, but they won’t resolve existing ones! Make sure you seek professional help if the IRS has already contacted you and try to resolve those issues as soon as you can.

Not having an accountant

As you expand your business, it’s common to be swamped with all kinds of responsibilities. Managing a company is no easy task, and it’s important to make good use of your time in areas that only you can manage. This is why it’s common for smaller businesses to hire accountants to manage all of their financial responsibilities. This might seem expensive, but as long as you’re keeping track of your financial situation, you can simply submit these documents to an accountant or financial expert and they’ll do all of the work for you.

Poor record keeping

Speaking of keeping track of your financial situation, make sure you’re actually recording all of your transactions as well. A lot of people overlook this and it leads to difficulties when it comes to calculating how much tax you owe. Thankfully, this is a fairly simple process nowadays because most sales systems and payment processing services give you some kind of transaction log that can be exported into other formats and then submitted to an accountant.

14 Common Tax Mistakes That Can Cost You Real Money

Taking shortcuts

Make sure you’re not taking any shortcuts when it comes to calculating your finances or logging transactions. Don’t mix up personal and business expenses as it can make things difficult to report, and don’t misclassify your employees out of laziness. These kinds of shortcuts can easily lead to penalties and legal issues if you’re not careful.

Not taking advantage of deductions

Lastly, make sure you’re taking advantage of the various write-offs available to businesses. Small businesses usually forget about these deductions and credit options, meaning they’re essentially throwing away money. Familiarize yourself with these deductions and credits that are available to you and take full advantage of them to help your business flourish. Financial responsibilities can be difficult to manage, especially if you’re just a small business. Make sure you contact experts when you need help, and be diligent about keeping records.

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