Small Business Tax Preparation Mistakes That You Should Avoid

Small Business Tax Preparation It is not uncommon for people to make mistakes on tax returns, but when they occur in businesses, auditors can be less forgiving.  Hence, it is best to make yourself fully aware of common tax preparation mistakes that can cost your business. Nearly every year there are tax code changes that effect small businesses. Pacific Tax & Financial Group alerts all of its small business clients about tax codes updates so that they can adjust to save money.

 

Call us today at (760) 471-2040 to get the best tax advice for your business! Below are a few mistakes that are common to small businesses.

  • Did you know that if you started a business last year you can write off the expenses that you incurred before your business technically opened its doors? This is an important deduction that many people overlook.
  • Confused about what is classified as a legitimate business deduction regarding their vehicle and mileage? When you drive from your office to see your customer or a vendor, it is considered a business expense. Commuting from home to office is not Traveling from home or office to any business location or to conduct business is considered a business expense.
  • Don’t forget the smaller deductions because they also add up. Magazine subscriptions, professional memberships, educational classes, petty cash purchases and similar costs add up. Keep track of these and consult with an accountant or tax professional about what can and cannot be deducted.
  • Don’t overdo it. Exaggerating your deductions will increase the odds of an audit by the IRS. Many small business owners believe they can deduct the full 100% of the expense for meals when traveling or gifts for clients. These things are only partly deductible.
  • There are more tax obligations other than the IRS. You have property taxes, payroll taxes, excise taxes, local taxes and self-employment taxes. They can come back to cause problems if they aren’t paid on time.
  • Make sure you keep your personal and business accounts separate. Separating accounts help you keep track of expenses and income and is recommended if not required by the IRS with certain business entities.
  • According to statistics, about 40% of small businesses get about $845 in penalties from the IRS. Make sure payroll taxes are correctly deposited, you should use a payroll company to handle these matters. We offer these services!
  • Keep all records current, making sure they are tracked, reconciled and supported with receipts. You should review your accounts weekly, including credit card transactions, payables, receivables, cash flow and so forth. Accounting software can help with this matter as well.

 

Don’t risk missing out on deductions or sending in your business’s tax return with errors. Instead, call the experts at Pacific Tax & Financial Group Inc at (760) 471-2040 to schedule an appointment today.

 

Securities and advisory services offered through NATIONAL PLANNING CORPORATION (NPC). Member FINRA/SIPC a Registered Investment Adviser. National Tax & Financial Network Inc, Pacific Tax & Financial Group Inc and NPC are separate and unrelated companies.
NPC does not provide tax advice.

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