Tips for Avoiding Common Business Tax Mistakes
Filing of tax returns is essentialread more here for your business as it keeps you in check with the authorities. You should pay the taxes to avoid wrangles with the authorities.
It is thus important that as a licensed business, make sure that you file the returns without any underpayment for peaceful business operations.
Any business tax mistake that might occur when filing your tax returns should be rectified as quickly as possible. For instance, filing late returns can attract consequences.
When filing business tax returns, there is always the possibility of oversight so always be careful. 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.
It is essential to organize yourself and keep in mind the deadline for filing returns just as you have the date for paying your contractors.
A business is normally penalized for late filing of returns which is an unnecessary expense. To avoid these penalties, you should have your secretary always remind you of the deadline.
Another common business tax mistake you should avoid is misclassification of your employees. In a business, if you hire a contractor to do a job for you, make sure you clarify whether they are independent or permanent employees in your organization.
Also, whether it is a contractor or an employee, depends on how much control you have over them.
An employer always has control over their employees so make sure that you classify your employees and independent contractors separately. You should also make sure their salaries are classified separately when filing tax returns.
To avoid common business tax mistakes, you should treat them separately. This can be a real mess up and will cost you a lot of money to rectify.
Because it is a quick way to pay for expenses, many people end up paying for all their personal and business expenses using the same credit card. You should avoid this since mixing of the expenses always results in an audit of your accounts.
It is necessary, therefore, to have a separate business bank account with its own business records.
It would be best if you open separate accounts to make it easy for you when filing tax returns. If you choose to use the same credit card for both personal and business expenses, you should make sure you have the records of each expense.