How to Avoid Common Business Tax Mistakes
To be at peace with the authorities, you should always file your returns on time. If you want to avoid brushing shoulders with the tax authorities, you need to file your tax returns on time.
It is thus important that as a licensed business, make sure that you file the returns without any underpayment for peaceful business operations.
In most circumstances, there can be errors during this process and a business owner should make sure that they correct them as quickly as possible, or else they’ll attract penalties. One of the imminent mistakes is the late filing of returns which will attract penalties.
When filing business tax returns, there is always the possibility of oversight so always be careful. Illustrated below are tips to help you avoid possible business tax mistakes.
It is essential to always be sure of the tax return deadline to avoid late payment. Due to your tight business schedule, you rarely check the important dates on your calendar.
It is, therefore, necessary to have in your schedule a marked tax deadline to avoid late payment of taxes.
A business is normally penalized for late filing of returns which is an unnecessary expense. To avoid these penalties, you should have your secretary always remind you of the deadline.
Another common business tax mistake you should avoid is misclassification of your employees. It is essential to know the difference between an independent contractor and an employee in your organization.
How much you control a contractor will tell whether they are employees or independent contractors.
You will always have limited control over an independent contractor so make sure you do not misclassify them or else you will be caught on the hook for a lot of money. The payments should also be classified separately on the business’ tax return form.
You should also classify your business and personal expenses separately. This can be a real mess up and will cost you a lot of money to rectify.
In most instances do you find business owners paying for their expensesclick here for more from the same bank account as they consider it easier and quicker? Mixing of the business and personal expense is likely to attract a penalty on your business.
To avoid the audit process, you should always have a separate account for both your business and your personal expenses.
It would be best if you open separate accounts to make it easy for you when filing tax returns. But in case you are using the same account, make sure you have the records right.