File tax returns is an overwhelming task if you try to do it at the last minute. This especially stands true when you are filing tax returns for your business. If you see last year’s data, you will find that hundreds and thousands of businesses have started operating. Starting a business is an easy part; you just need to combine different aspects of the business, and you will have a running business.
The most difficult part of the business is filling your tax returns. Unfortunately, most business owners who are comfortable with running their business without any issues find it intimidating when it comes down to filing tax returns.
If you are one of them, you must be worried about the mistakes you can make while filing tax returns. We would advise you to hire a lawyer to get the paperwork ready for filing tax if that is the case. If you want to know more about how lawyers can help you with the tax filing, read more here.
Common Tax Mistakes All Businesses Should Avoid
There are a few mistakes that businesses should avoid while filing their tax returns. Some of the mistakes we will talk about will help you smoother up your filing process and save some of your taxes.
1. Not paying Your Quarterly Taxes
No matter whether you are a new startup, sole proprietary, or self-employed unless you fall under the exemption, you are exposed to pay quarterly taxes. In fact, by doing so, you can avoid several problems down the road. Paying your taxes quarterly makes your tax bill smaller.
2. Not Keeping Track Of Your Expenses
No matter the size of your organization, you must always keep track of your business expenses. If you do not have the right recipe for the expenses you have made, you are simply leaving your money on the table at the time of tax filing. You must maintain the right document with detailed information about the responses so that you can easily pay your tax payable.
3. Failing To Take Home Office Deduction
This is something only a few businesses are aware of and hence are missing opportunities to get some tax deduction. The rumpus says that by taking your home as your office, you can reduce the office rent cost from the taxes. That means you can deduct the portion of your rent, mortgages, utilities, and insurance.
4. Claiming Equipment As Supplies
You must have a clear idea that business equipment is not supplied. Unfortunately, most business owners do not understand these facts and give more tax than they actually need. Equipment is an item that will be used for more than one year. On the other hand, supplies are disposable items. Segregate these two and enjoy the tax deduction.
5. Choosing The Wrong Legal Business Structure
Choosing the right legal structure for your business is important. The taxation process depends on what kind of business you are. Depending on the type of legal structure, you might be able to segregate the personal property from the commercial property, thereby reducing the amount of the tax you are liable to pay.
6. Not Issuing Employees Proper Tax Documentation
Payroll taxes are expensive and difficult to deal with at times. However, they are also a key part of running your business. If you don’t give your employees the necessary documents, they won’t be able to pay their taxes accurately. Practice giving relevant documents to the employees to avoid any future problems.
7. Trying To File Tax On Your Own
Most businesses try to file for the taxation on their own to save some hundreds of bucks. While it is possible to file tax on your own, it is not always in your best interest. You are not well versed with the taxation law; you might make a few mistakes with your tax filing process. However, hiring a lawyer will ensure everything is filed accurately.
Avoid Making These Mistakes
Well, nobody wants to pay their hard-earned money to anyone. But as a responsible entity of society, paying taxes is one of the responsibilities that everybody should fulfill. However, paying your taxes is followed by a complex process. Hence, there is always a chance of making mistakes.
This article has discussed the mistakes that every business should avoid while filing taxes. Some of the mistakes can actually save you from paying more taxes than you’re liable for.