Small businesses can take a feeling of dread when it comes time to look at our pile of receipts and mountain of tax forms. Even a little mistake can cause problems when preparing your tax return. Your refund could be delayed, or you could end up with a larger tax bill than you should, or even more devastating, you could get audited. To make sure your paperwork is error free, the best way is to ensure the IRS processes your return with no problems. We at Mecham Dicus & Company would like to share these common business tax mistakes.
Math Errors on Tax Returns
One of the most common mistakes the IRS cites every year is math errors. Mistakes with addition and subtraction, transferring a number incorrectly, and forms are often to blame. No matter the cause, math errors will get you an immediate correction notice. Double and triple check that your numbers match on every form. Even if it seems simple, use a calculator for addition and subtraction as well. If you use tax preparation software, you may think you’re immune to this issue, but that is not accurate. Every number thereafter is wrong as well, should one finger slip and your initial numbers be wrong. Be sure to check each entry against your W-2s and 1099s since if the IRS you were overly negligent, they will charge you a 20% penalty.
Uneducated on Tax Liabilities
Small businesses have far more tax liability as opposed to being filed as an employee. Ignorance will not exempt you from penalties, so make sure you know the laws. Depending on your location, corporate, sales, and payroll taxes can also have special taxes. Especially if your business delivers to multiple states you need to be aware of what states you owe taxes in also.
Not Filing as the Right Business Types
You have some options as to how you file as a business and each option all has different tax liabilities. Your tax bill can go up by thousands if you file as the wrong type of business for your revenue.
Not Keeping Accurate Financial Records
All part of the proper record-keeping you’ll need to file your taxes, is keeping track of your expenses, income, and payroll. If you ever get audited as well as ensuring you don’t overlook legitimate write-offs, these items can help. Should you not have the receipts to back them, you could easily lose deductions. Using a cloud accounting tool can not only make this easier, it will also cut down on paperwork, but be sure to save those invoices, receipts, and any other paperwork you may need.
Missing Information on Tax Return
One of the most common mistakes the IRS sees, is missing the obvious. A few of these examples include
– Not filling out your social security number/ or miswriting it down
– Not including attachments like W-2s and 1099s
– Forgetting receipts for things like charitable donations and property tax
– Neglecting the signing of your forms when you’re done.
Tax Services & More in Salt Lake City, St. George, West Valley City, Provo, Orem, West Jordan & Greater Cedar City, Utah
Once you have completed your business’s taxes, step away from it for a few days before filing, and with fresh eye, double check for mistakes. To make it simpler, call Mecham Dicus & Company and let our certified experts prepare and file your tax return for you.