Tax Mistakes That Small Businesses Make

Posted by Christopher Hooper In NCE Newsletter 0 comment

It’s advisable for a small business owner to hire a tax professional rather than attempt to file taxes themselves. Don’t bother looking to the IRS for help or relief; it’s up to you to make sure your taxes are accurate and filed on time. Here are a few of the common mistakes small business owners make during tax season.

Filing taxes yourself

Don’t hire a friend or try to file taxes yourself. If you’re running a small business then filing taxes is best left to professionals. We suggest you hire a CPA for peace of mind and a guarantee your taxes are filed correctly.

Don’t get overexcited about a refund

Your objective is to receive a small refund from your taxes. Be wary of receiving a large refund check from the IRS. A large refund means that you’ve given the IRS interest-free money.

Employee gifts

Giving too many gifts to your employees can boomerang on you when you file taxes. Unfortunately the IRS only allows you to deduct up to twenty five dollars worth of gifts per year, per employee. So anything over that is a nondeductible expense.

Know what’s deductible

This is the perfect reason to hire a tax professional. Too many small business owners miss deductible expenses during the year. Use common sense when you make a purchase. Even talking business over dinner with friends can be a deductible expense.

Never throw away receipts

The easiest thing to do is to create a tax journal for this purpose. Write on the receipt the purpose of the purchase, who you were with, and save it. If the IRS asks any questions you’ll be able to answer them out of your tax journal.