Tax season is when many small business owners find themselves scrambling to get their paperwork in order. Unfortunately, many of them make common mistakes that can end up costing them money. Let’s look at some common areas where businesses make mistakes with taxes. We’ll provide tips on avoiding these mistakes and keeping your business finances in check!
As a business owner, you have a lot on your plate, especially if you are just getting started, so tax deadlines often sneak up on you. Unfortunately, this can result in late fees and penalties, which can add up quickly. For example, if you miss the deadline to file taxes, you are looking at a 5% per month penalty from the IRS that increases until your return is filed.
If you think you might miss the deadline, you can file for an extension. You might also consider utilizing tax software to help ensure you get everything done on time. Proliant ensures your taxes are filed on time, and you stay compliant with local, state, and federal laws.
Another common mistake small business owners make when it comes to taxes is missing forms or including incomplete information, resulting in delays in processing or even an audit.
Did you know that tax forms W-2 and 1099-NECs are due to recipients by January 31st for the following tax year? For example, many new business owners that use contractors and consultants as they get started often forget the required 1099 forms that both the people getting paid and the business need to report income and expenses. You must also file W-2s with the Social Security Administration by January 31st.
There are various other forms, schedules, and election statements required when you file, and it can become pretty overwhelming to keep up.
Proliant’s certified payroll professionals (CPP) set up your complex payroll and tax rules so that you’re sure to have everything you need in the right place at the right time.
Not paying estimated taxes throughout the year is another common mistake made by sole proprietors, partners, S corporation shareholders, and the self-employed. If you fall into one of these groups and expect to owe $1,000+ when you file, then you have to make estimated payments throughout the year to avoid interest and penalties.
Proliant can help by ensuring your tax filings are done on time and are compliant so that you don’t end up paying more in the end.
Another mistake business owners often make is forgetting to deduct expenses, including:
But be careful not to take improper deductions. This can happen if you deduct personal expenses as business expenses or claim deductions for which you are not eligible. Be careful only to claim deductions that you are entitled to so that you don’t pay more in taxes than you owe.
Many small business owners fail to keep good records. Be sure to keep track of all of your business expenses throughout the year to claim them on your taxes. Good record keeping will save you a lot of time and stress come tax season!
Keep receipts and travel logs and hire a bookkeeper to help track your expenses throughout the year.
Many small business owners fail to stay informed about tax developments that could affect their business, resulting in missed opportunities or penalties. Be sure to keep up-to-date on tax law changes to take advantage of deductions and credits and avoid penalties.
The tax experts at Proliant continually stay up to date about new developments, ensuring our clients have everything they need come tax season.
Understanding federal versus state tax rules can be overwhelming, but it’s important to understand what’s different. You may be required to pay federal, state, and local taxes. Be sure to research the tax requirements to stay compliant and avoid penalties. Here is a list of state tax changes taking place this year.
Proliant’s payroll and tax solution ensures you are compliant with state, local, and federal tax requirements, so you can rest easy knowing you won’t be facing any penalties.
Too often, small business owners overlook potential deductions and pay more taxes than they should. Retirement expense deductions are one of the most commonly overlooked deductions for small business owners. If you have a 401(k) or other retirement plans for yourself and your employees, you can deduct the contributions you make to the plan from your taxes.
Also, choosing the wrong retirement plan could mean you aren’t getting all possible deductions, and you could end up owing contributions to your employees that are out of your budget. There are also tax credits that may apply when you start a retirement plan for your business.
It’s important that you discuss your options with a certified financial planner so that you are sure to choose the best plan for your business.
If you avoid these common tax mistakes, you’ll be well on your way to a stress-free tax season! Be sure to consult with a tax professional if you have any questions or concerns about your taxes. And remember, Proliant’s payroll and tax solution is a great tool that helps businesses stay compliant while receiving the tax credits and deductions they deserve.
If you’d like to learn more about how Proliant can help your business come tax season and throughout the year, contact us today.
No Comments Yet
Let us know what you think