Small business owners (SBOs) have more than enough on their plate – generating new business, keeping current clients happy, and coming up with new ideas to grow their company (to name but a few). Add in accounting, number crunching, and taxes, and it can quickly become too much for even the most ambitious of entrepreneurs. The consequences for taking on too much can be many. One, in particular, has to do with mistakes in tax filings. To help SBOs combat this, our blog today will delve into some of the most common tax mistakes business owners can make.
Avoid These Common Tax Mistakes
Running a business is about making money, and one of the best ways to make money, is to avoid losing money – especially over something that you can actually avoid. Downturns in poor economic times or closures due to natural disasters are out of our control (though we can prepare for them…but that is another article!); making a costly mistake in our tax filings is something we absolutely can control – with a little bit of tax-friendly information.
Quarterly Estimated Taxes
There you are, bumbling along and enjoying life as your business becomes more and more profitable. Then tax time appears and Uncle Sam hands over your bill – and it is not good. Success has a cost, and the IRS is here to collect! The shock of your yearly tax bill can be pretty staggering if you wait until the end of the tax season to pay it. Fortunately, the government has a method to reduce some of this shock. By paying quarterly estimated taxes, you can reduce your end-of-year taxes and not have to have your company absorb such a large financial blow all at once.
Be financially savvy and take advantage of this option; you’ll be glad you did!
As you purchase goods for your business – office supplies, hardware, and so forth, you are always careful to save the receipts. Maybe you even take the time to file them and organize them as you go – if so, you are well on your way to getting the most out of your tax deductions. Another valuable, and often-overlooked aspect of tax deductions is conducting research on what, exactly, you can write-off. Everyday supplies are simple enough, but what about more complicated items? How about mileage and gas? Cell phone bills? The cleaning lady and lawn services? And, of course, the home office deduction.
Knowing what – and how much – you can deduct will not only save you money, but help you avoid raising any red flags that may lead to a tax audit by the IRS. Save your receipts and conduct your due diligence!
Tax Professionals and Certified Public Accountants
One key to being a successful small business owner is knowing how – and when – to delegate work. As the CEO, your job is to keep the business running and grow your revenue. Just as a successful business owner wouldn’t waste 8 hours a day filing paperwork and answering phones, the head honcho probably should treat their taxes the same way. Hiring a tax professional or Certified Public Accountant (CPA) is smart for many reasons – particularly if you employ the service of a CPA. In the latter case, you will not only have someone in your corner that studies the constantly changing and complex tax codes and tax laws, but you will have a financial professional that can help you budget, cut costs, and come up with new ways to increase business – a good person to have a great relationship with!
Know when to delegate your taxes and the benefits of hiring a CPA for not only your tax filings, but for all of your financial and business needs!
If you need help this tax season, why not give the tax pros at Clayton, Paulk, & Associates a call?