We get it. You work hard to achieve success, and you want to keep as much or the profit in your bank account as possible. We’d love to see you do that too. It’s what we help our clients do, but we have also seen so many business owners make mistakes on their tax filings that we thought we’d share a few of the more common ones:
When you own a business, you need to avoid misreporting income. Misreporting means underreporting, overreporting, or listing the income incorrectly on your tax return. The IRS will catch underreporting, and they will not know if you overreported or mischaracterized revenue. Underreporting and mischaracterizations are mistakes that occur during the preparation of your return, so the IRS won’t know if you made an error. All three mistakes can reduce your profitability.
Not Filing or Paying Taxes on Time
If you miss the tax filing deadline, your business may be assessed a hefty penalty by the IRS that will continue to increase until the return is filed. You can request a filing extension to give you a little more time, but even if you request an extension, you still need to pay some tax by the original due date. If you don’t have the money, you’ll need to find an alternative way to work things out.
Not Doing Any Tax Planning
If you’ve ever been shocked by what you owe when you file your tax return, you’re not alone. Many business owners only hear from their accountant shortly before it’s time to file. To avoid this, consider working with a tax professional who can help with your tax planning. This may help reduce the taxes you need to pay as well as the stress most people feel when filing their taxes. At the very least, you will be better prepared for the tax you do have to pay.
Avoiding Costly Tax Mistakes
It’s very tempting to go the less expensive route and do your business taxes yourself. While this may work for some very small sole proprietorships with an uncomplicated setup, it isn’t a good idea for most businesses- even if you are using tax software. Not only do you run the risk of filing an inaccurate return, you may even miss a few deadlines or major deductions simply because you don’t know that you qualify for them.
Working with a knowledgeable accountant – or, better still a Tax Consultant – helps you avoid these costly tax mistakes. When choosing an accountant, make sure they are certified and have experience with tax planning. You may only need to file taxes once per year, but the process and planning that will significantly reduce your taxes happens year-round. Avoiding the mistakes above will help make the tax filing much less painful. Working with a Certified Tax Consultant can make it even less so.
Would you like to learn more about how Hundley Advisors can help you reduce your taxes? Schedule a quick 15-minute call with our top Certified Tax Consultants at this link: https://bit.ly/3LHKTau.