Top Three Tax Errors You Should Avoid!
When trying to run your business successfully, there will be pitfalls along your journey to success. There are three common mistakes that business owners make without realizing them, leading to an undesirable tax situation.
The first mistake is not understanding what legal entity to register your business as. It’s an exciting time to get your business set up with the state as quickly as possible! However, you do not want that feeling and realization that you have made a huge mistake when it comes to tax filing because you just wanted to get started. Therefore, it is vital to get your business entity right.
The second mistake is not understanding the importance of maintaining adequate books and records for your business. You might be good at what you do but it does not mean that you are an expert in bookkeeping and accounting. We have seen many instances that the books were in a mess come tax time, leading to a big bill and inflated tax liability. It can be avoided by hiring a licensed bookkeeper, accountant, or even a CPA so the books can get done properly. This will maximize your business deductions, leading to tax savings and avoiding the unnecessary and messy situation described earlier in the first place.
The third mistake is not understanding how to properly pay yourself. We find that many business owners that start do not realize that their business accounts are not their personal bank accounts. In turn, they take money from the business accounts to pay for personal expenses. This is considered a red flag for the IRS and could lead to an audit. To make things worse, you might find that you don’t qualify for a business loan once you apply for one as your numbers don’t reflect your proper earnings.
Have questions on how to get your business started right? Please do not hesitate to call us at (832) 295-3353 to schedule an introduction meeting. You can also set up an appointment with us at https://xqcpa-bookme.acuityscheduling.com/schedule.php. Last but not least, please like and share our daily posts.