When it comes to tax season, it isn't uncommon that business owners (who file their taxes) tend to wait till the last minute to submit their tax returns. They may end up missing deductions resulting in overpaying taxes, and no one wants to overpay on anything. These mistakes are quite costly so we will go over the top three mistakes that business owners make while filing their business taxes.
Missing out on deductions
Skipping out on this because you're not sure that you'll get any money back could end up costing you hundreds or even thousands of dollars. Deduction rules change from year-to-year, so check the qualification requirements of every year you plan to claim one to ensure that you still qualify
Filling out the incorrect form for entity structure
Choosing the incorrect entity structure could mean double taxation for the company. There are options on how you file, like a sole proprietor, LLC, or S corporation, all have different tax liabilities. Be aware that this may change as your business does. What was best for your startup probably won't be the best for your business after 5 years. Filing as the wrong type of business for your revenue could up your tax by the thousands.
While you want to claim every single deduction & credit you're owed, you don't want to claim any tax breaks that you aren't eligible for. Those that try pulling a fast one on the IRS will most likely get you audited and if you're caught, you could owe back taxes, interest, and penalties.
Wait, there is one more!
A lot of business owners will not have a set of books, but what does that mean? That means they don't have financial statements which usually composed of a balance sheet and a profit and loss sheet. Without those statements, they don't have any idea what their business income and expenses are. This will usually lead to business and personal funds commingling with each other and it'll be difficult to determine what is actually deductible and what's not.
If you need accounting or tax help, please call us today at (832) 295-3353 or please schedule your next appointment with us here > https://xqcpa-bookme.acuityscheduling.com/schedule.php. We are here for you!