Tips for Avoiding Common Business Tax Mistakes
Payment of tax is important to any business as it keeps the authorities off your back. 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.
Any business tax mistake that might occur when filing your tax returns should be rectified as quickly as possible. You can for instance file your returns late and there are consequences to that.
When filing business tax returns, there is always the possibility of oversight so always be careful. Illustrated below are tips to help you avoid possible business tax mistakes.
It is essential to always be sure of the tax return deadline to avoid late payment. As a business person, it is hard to always find time to check certain matters about your business because of your tight schedule.
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.
If you file your tax returns late, you are likely to attract a penaltyview here which will force to spend unnecessarily for ignorance. 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. Furthermore, once you have determined the difference, you should classify their paypage as well on your tax returns.
It is also advisable that you avoid mixing your personal and businesses expenses. If you don’t differentiate your expenses, you are likely to be penalized by the authorities.
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. Mixing of the business and personal expense is likely to attract a penalty on your business.
To avoid the audit process, you should always have a separate account for both your business and your personal expenses.
Having separate business and personal credit cards will save you a great deal when filing business 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.