Small business owners may think doing their taxes is just another task to cross off their to-do list. However, speeding through taxes could leave you open to mistakes when filing taxes.
Failing to comply with tax laws, violating tax codes, or filling out forms incorrectly can leave your small business open to penalties. To avoid these kinds of errors, we recommend using IRS Free File or to hire a CPA.
Here Are Four Tax Mistakes Small Business Owners Should Avoid:
Underpaying Estimated Taxes
Small Business owners should make estimated tax payments if they expect to owe tax of $1,000 or more. You may be charged a penalty if you don’t pay enough taxes through withholding.
Depositing employment taxes
Small Business owners with employees must deposit the taxes they withhold, as well as the employer’s portion of those taxes. If these taxes are not deposited correctly and on time, you may be charged a penalty.
Business tax returns must be filed in a timely manner. To avoid late filing penalties, you should be aware of all filing deadlines for their type of business.
Not separating business and personal expenses
Not separating business and personal expenses could cause errors when claiming deductions and become a problem if the taxpayer or their business is ever audited.