Ways of Avoiding Common Business Tax Errors
To be at peace with the authorities, you should always file your returns on time. If you want to avoid brushing shoulders with the tax authorities, you need to file your tax returns on time.
It is thus important that as a licensed business, make sure that you file the returns without any underpayment for peaceful business operations.
In most circumstances, there can be errors during this process and a business owner should make sure that they correct them as quickly as possible, or else they’ll attract penalties. For instance, filing late returns can attract consequences.
As a business owner, you should be careful when making tax payments to avoid possible business tax mistakes. In this article are some of the things you should do to avoidmore the common business tax mistakes.
The first thing you should do is check the deadline for filing the returns. Due to your tight business schedule, you rarely check the important dates on your calendar.
That is why just as you have a day for paying your employees, you should also include in your records the day for filing your returns to avoid late payment of taxes.
A business is normally penalized for late filing of returns which is an unnecessary expense. You can thus have one of your employees to keep tabs on such important dateslearn more so that the business can operate successfully.
Another common business tax mistake you should avoid is misclassification of your employees. Always make sure that when you hire a contractor, you classify them accordingly.
How much you control a contractor will tell whether they are employees or independent contractors.
You will always have limited control over an independent contractor so make sure you do not misclassify them or else you will be caught on the hook for a lot of money. You should also make sure their salaries are classified separately when filing tax returns.
It is also advisable that you avoid mixing your personal and businesses expenses. Any person that fails to separate their personal expenses from the business expenses is likely to pay a penalty fee to the tax authorities.
Many people are fond of paying for all their expenses using the same credit card as it seems easier that way. But there are consequencesthis site for such when you have to pay taxes.
You should, therefore, keep every expense separateread more now to avoid an audit from the tax authorities.
You should have a separate business account from your personal account to make it easier when filing the returnsmore. It would be best to keep records of all your expenses, especially when you choose to use a similar account for all your expenses.