4 Mistakes To Avoid Making With Your Business Taxes
When you run a small business, everything is up to you, from hiring employees and managing insurance policies, to payroll and taxes. In terms of taxes, it is important that you understand how much to pay, when to pay, and how often. Avoid these common business tax mistakes.
Using the Same Account for Business and Personal Use
You should never combine your small business and your personal bank account. This is unfortunately a common mistake made by small businesses, especially when you have sole proprietorship. By having a separate business account, you are able to streamline all account activity and see exactly what expenses and investments are business-related. Keeping them separate can also help to protect your personal finances and see what deductions you have for your business.
Not Tracking Your Expenses Properly
It is also very important that you have a good way of tracking your expenses. Don't just wait until the end of the year and try to figure out or remember the expenses you had. You need to know how every cent was spent, including how much of your income or savings was spent on utilities for your business, rental space, payroll, transaction fees, and marketing. Many of these costs allow for tax deductions, but only if you have details about the expenses and receipts to back up your claims.
Failing to Pay Your Taxes on Time
Paying your taxes on time is crucial when you run a business. If you have just started your business and don't know when you need to pay your taxes, contact a tax attorney or an accountant, like Hy Appelbaum CPA. They will help you schedule the times during the year to pay them. Some business owners pay them once a year, though most will pay them quarterly. Make sure you file and pay the taxes promptly to avoid penalties.
Filing the Taxes Without Help
It is also a good idea to get help when filing your taxes. Unless you are a sole proprietor with basic tax filing needs, it helps to have an accountant. They can help you decide when to file, look over your business expenses, and get you the most for your deductions. This not only ensures you are paying the least amount possible and that you aren't underpaying or overpaying, but also that you avoid any issues with the IRS later on. The last thing you want is an audit because you filed them incorrectly.