How to Avoid Common Small Business Tax Preparation Mistakes
When you’re running a small business, tax season can be extra challenging. Small business owners have to wade through a confounding array of deductions, credits, and other specialized benefits that aren’t available to those filing as individuals or in larger corporations. And the IRS penalties for making mistakes or misfiling are especially draconian when it comes to taxes on business income. Therefore, small business owners must understand the most common mistakes made when preparing taxes for a small business—and learn how to avoid them.
Here are four of the biggest mistakes to watch out for when preparing your taxes:
Not Knowing Small Business Tax Breaks
Small businesses can take advantage of any number of tax breaks and credits. From deductions for owning a home office to accelerated depreciation allowances, there are many different options available. It’s important to be aware of all the potential tax benefits you or your company may qualify for. Your accountant should be able to provide you with advice on which credits or deductions you’re eligible for, but taking some time to familiarize yourself with what’s out there will help you stay organized and make sure you haven’t missed anything.
Failing to Stay Up-to-Date with Tax Regulations
Tax regulations are constantly changing, which means it’s important that small business owners stay informed of the current laws and requirements. Small businesses should keep up with all changes in tax laws, as well as any new IRS forms or notices that could affect them. Failing to do so could result in unexpected audits or penalties. Small business owners can take advantage of resources like the Small Business Administration’s Small Business Development Center (SBDC) for help staying informed about the latest rules and regulations.
Incorrectly Claiming Deductions
Deductions for a small business are different than deductions for individuals. Small business owners must be aware of which deductions they’re eligible for, as well as how to properly claim them. The IRS has specific rules and guidelines that must be followed when claiming business deductions. Failing to follow these rules could result in an audit or penalty.
Not Seeking Professional Assistance
When it comes to preparing taxes for a small business, professional assistance is often your best bet. An experienced accountant can help you identify the right deductions and credits, keep track of all tax forms and paperwork, and make sure everything is filed correctly. A qualified accountant will also be able to answer any questions or concerns you may have about filing taxes as a small business owner. Molen & Associates has been helping small business owners with their taxes for over 40 years.
We specialize in partnership tax preparation and other unique small business ownership challenges. Our experienced team of accountants can help you navigate the complexities of small business tax preparation with ease and confidence. Contact us today to learn more.
Conclusion:
Tax season can be extra challenging for small business owners, but by avoiding the common mistakes discussed above, you can ensure that your taxes are filed correctly and on time. Professional assistance from an experienced accountant can make the process easier and provide invaluable peace of mind. Molen & Associates is here to help—reach out today to get started!