Everybody makes mistakes, but you want to avoid making one when preparing your business taxes. A single tax-related mistake can be costly and negatively affect your business reputation. The best way to avoid these mistakes is to let an expert in tax preparation in Troy, MI tackle this task for you. With your tax partner, you can avoid making the following mistakes:
Not Filing or Sending the Proper Forms
Depending on your business structure, your industry, and the number of employees you have, you may need to file and send various forms to the IRS. These forms such as payroll taxes, sales tax, and estimated income tax, may need to be filed quarterly. Other forms must be submitted yearly.
You may be able to set up your accounting and payroll software to give reminders about forms and payments your businesses must file. Alternatively, your accountant or tax partner can set up a yearly calendar to stay on top of what’s due and when.
Underestimating and Underreporting
As a business owner, you may need to make tax payments every quarter based on the year’s estimated tax bill. Underestimating and underreporting your payments can result in you facing a penalty. If the IRS finds you unreasonably careless or negligent in reporting your income, you could face a 20 percent penalty. If the IRS discovers an attempt to defraud the report with intent, the fine can be up to 75 percent.
Not Separating Personal and Business Expenses
Particularly if you have a new business, you can mix things up. However, the IRS has strict rules against mixing personal and business funds. Tax deductions only apply to business-related expenses and to ensure this, you must keep your finances separate.
Thus, you should open a separate bank account for your business and use a business credit card only when buying something for your company. Should you use personal assets for business purposes, ensure you keep detailed records that support the deductions you take.
No matter how young or old your business has been, you should do your taxes regularly; instead of taking it as a once-a-year obligation. When you take care of your taxes at the last minute, you could miss out on important deductions due to failure to monitor spending. Also, this could pay more accounting fees to get things sorted out. Having a reliable bookkeeping system in place allows you to have control over your finances and handle them better.