While the IRS is known for dealing out penalties for making a mistake on your tax return, there are ways to avoid these penalties.
Many small business owners dread the looming deadline of tax day, and dealing with the IRS can be intimidating. In fact, many people are unaware of how taxes and the IRS ultimately work. It’s important that you keep proper records, pay your due taxes, and follow all IRS rules and guidelines as a small business. While the IRS is known for dealing out penalties for making a mistake on your tax return, there are ways to avoid these penalties. Let’s go over some common tax mistakes you should avoid.
Procrastinating on Your Bookkeeping
It can be easy to stash all your receipts and bank statements away until it’s tax time. But waiting until the last minute does more harm than good. It is harder to get organized when you leave everything to the last minute, and you are also more likely to forget something if it has been a while since you checked your books. If you wait until the deadline, you will feel rushed and more stressed when doing your taxes. By keeping proper records and paying attention to them, you can use the information you learn to for better tax planning later.
Not Tracking Expenses Properly
As a small business owner, you may struggle to keep a proper account of incurred expenses. But that could result in a missed opportunity for tax deductions. It is important that you handle your business expenses records with care and attention, save all relevant documents, and track and categorize every expense. If tracking your expenses is too much for you to handle on your own, consider using software or apps to track your expenses for you. You could also outsource to a qualified bookkeeper to maintain accurate records of your business expenses.
Missing Out on Tax Deductions
Unless you have a good understanding of tax codes, it is common to miss out on tax deductions that could save you money. The IRS allows a variety of deductions for small businesses. For example, you can deduct travel expenses, office equipment, and even business lunches from your taxes. Make sure you review the list of potential business tax deductions on the IRS website before filing.
Falling Behind on Payments
As a small business owner, there are a lot of deadlines you need to keep up with at the same time. It can be easy for one or two payments to fall between the cracks. But it is in your best interest to always submit payments on time. Make sure you keep track of important deadlines on your calendar in advance so you never miss a payment.
Contact Bowman & Company Today
Bowman & Company CPA, PC provides all of our individual and small business customers with experienced, accurate, and affordable financial services. Our financial services aim to decrease your taxes and increase your net worth through responsible, timely, and accurate record keeping. We offer our services to clients throughout the Washington, D.C., metropolitan area, including Maryland and Baltimore County, Columbia, and Howard County. For more information on our offerings, contact us online or call us at (410) 381-8121. You can also find us on Twitter, Linkedin, Facebook, and Youtube.