Filling the small business taxes is considered to be a very important process for every business.
There are several mistakes small businessman make when filing the taxes. They are-
Not filing or paying taxes on given time
The major issue is that, some enterprisers think about the taxes only on the last day of the tax filing. If a businessman misses the deadline of the tax filing then the business will be punished a 5% penalty per month by the IRS which will forward to increase till the time the return is yield.
To get rid of the penalty during the worst cases a person can fill a request form to give the extension (a little more time to pay the tax and avoid the penalties.)
Not applying the Right Business Deductions
In case if the person does not want to pay more than the person actually owes on his taxes. The deduction in the business is the best way to do it.
There are several deductions that the business can qualify such as furniture and supplies, advertising licences, equipment, start-up expenses and much more.
Not Tracking Expenses Accurately
If the person does not have a record, then it becomes difficult for the person to take any tax deductions.
This simply means that the businessman has to be very particular and detailed with the business records, that includes saving receipts, travel log for mileage, tracking and categorizing expenses.
A businessman can solve this problem by working with a qualified bookkeeper who would look after the accountant services for small business.
Not Separating Business and Personal Expenses
If the person mix up the personal and business expenses then this could create a great mess that will have to be cleaned up when tax time rolls around.
A businessman can solve this problem by separating the business and personal expense by using separate bank and credit card accounts, keeping separate receipts and a businessman should pay him a salary instead of drawing directly from his business accounts.
Not Using or Hiring an Accountant
In the beginning, it seems easy to go the less business route and to do the business taxes himself with business tax software. But later on, it creates a massive problem.So an accountant is essential for managing the account services for small business properly and accurately.
Effective documenting expense and deductions require a proper recordkeeping process. Today in the era of modernization and globalisation where people strive to become paperless, but going digital really does not mean that one should ditch the hard copies.
Mistakes are committed by the businessman because they feel that they can do it by themselves, they can keep the receipts and they do not need a tax diary, his bookkeeper would never cheat him.
So, to solve this problem the businessman should be very particular about the taxes and should hire the bookkeeper or the accountants and he should not trust anyone blindly. if you have any query regarding this, contact us anytime.