For every small business, nearly every aspect of the company has potential tax ramifications. This doesn’t mean that small business owners should worry, but they should plan ahead and get as organized as possible. This includes learning how to avoid the most common tax mistakes among small businesses.
Doing taxes on your own
If you’re like most small business owners, you lack the necessary tax knowledge to properly prepare you taxes on your own. Unfortunately, if you use TurboTax, it won’t be able to help you during an audit. In the long run, it’s worth the time to invest in a professional accountant and bookkeeper.
Failing to keep a tax diary
Keeping an accurate tax organizer is not the same as keeping an expense log. Your tax organizer will provide all the questions that the IRS requires you to answer about your business, including travel, entertainment and other expenses. Additionally, your tax organizer helps preserve your records and eliminate procrastination. If you are audited, the burden will shift to the IRS to prove tax fraud.
Celebrating a tax refund
Like most people, you may consider a large tax refund cause for celebration. In realty, the IRS handing you a big check means you gave the government interest-free money for a substantial time period. To correct this problem, talk to a Tucson accountant about adjusting your withholding to the point where you get very little returned in refund.
Borrowing from employee withholding
If your business is short on cash, don’t be tempted to dip into the trust fund for employee withholding and Social Security. This money isn’t actually yours, so borrowing from withholding or Social Security can result in personal liability and long-term penalties. Instead, talk to your accountant about the proper way to borrow funds.
If you are looking for Tucson accountants, contact Kalil & Associates at (520) 628-4264. Whether your business needs help keeping its books balanced or requires detailed reports on project cost metrics, our associates can help. We are a leader in business tax preparation and bookkeeping in Tucson.