From managing clients and workers, to daily operations and everything in between, it’s not easy running a small business, and it’s perhaps little wonder that taxes so often get hastily filed, or overlooked altogether.
But, as easy as it may be to neglect your taxes as a business owner, or rush them as tax season approaches, doing so can prove costly, with mistakes typically leading to penalties or audits, or both.
Working with tax services in Miami is the most effective way to prevent the following 10 common business tax errors from crippling your company:
Not seeking professional guidance
Tax laws are complicated and can vary from state-to-state, industry-to-industry, making help from a qualified tax expert, extremely useful. Their guidance can help you maximize your deductions, time the purchase of major items strategically, and always be tax regulatory-compliant.
Ill-timed major purchases
As touched upon in the point above, knowing when you should make a major purchase for your company isn’t as simple as you might think. With help from a tax professional, you can determine whether to delay the purchase to make the most of your savings, or lower your taxable income by purchasing assets before the end of the year.
Not investing in retirement plans
As a way of reducing your taxable income, regularly contributing to retirement savings can be very useful, but without expert guidance, many business owners are unaware of this.
Not maintaining records
Monthly tracking of income and expenses can help business owners enjoy a less stressful tax season, but too many choose to only review their financials at the end of each year, which then leads to messy books and possible missed deductions. By working with a bookkeeper or accountant, you can keep on top of your financial records and make business decisions that are better informed.
Missing out on deductions
Deductions such as travel expenses, mileage, and home office, are often missed by business owners who are simply unaware of the potential deductions due to their lack of professional tax and financial guidance.
Underpaying estimated taxes
While taxes are withheld from the paychecks of traditional employees, owners of businesses must pay their estimated taxes periodically throughout the year. All too often, these are underpaid or forgotten about. Working with a tax professional can help you set up a plan for payments that works for you and the IRS.
Mismanaging payroll taxes
For small businesses with employees, payroll can be a significant headache. From misclassification of workers, to the late submission of payroll taxes to the IRS, there are many audit-triggering red flags involved with payroll, that guidance from a tax professional could help you avoid.
Misunderstanding safe harbor rules
Designed to protect the owners of businesses from tax penalties by permitting them to pay 90%, or 100% of their current or prior year’s tax liability respectively, safe harbor rules require a solid tax strategy to avoid over or underpaying, that many are unable to formulate without professional help.
Missing quarterly business tax deadlines
With specific dates set by the IRS for estimated business tax payments, it’s important that business owners understand these and don’t miss them if they want to avoid penalties.
Being unprepared for changes to tax laws
There is always the potential for changes to be made to tax laws, but with a tax accountant in Coral Gables to guide and remind you, you should be able to avoid unexpected increases in taxes.
Being proactive when it comes to taxes is always going to work in your favor as a business owner, and when you team up with a tax expert, you need never face financial ruin as a result of common, but easily avoidable, tax mistakes.
