As a business owner, one of the best financial steps you can take for your company is good tax planning. If taxes aren't filed properly, the damage to your business can be severe. It's especially important to be aware of common mistakes and misconceptions so you can get the most from your tax return. Here are a few longstanding tax myths and the truths behind them.

Top 5 Tax Planning Misconceptions About Business Returns

1.Start-Up Costs Can Be Deducted Immediately

There are limitations on the amount of your start-up costs which can be deducted—the rest must be amortized. Additionally, if you've spent more than $50,000 on starting your business, the amount you can deduct becomes even smaller. To ensure you're taking the correct deduction, have an accountant check your expenses.

2.If You Overpay, You Won't Be Audited

The IRS doesn't give extra credit. If you pay more than you're obligated to, you can still be audited—and if you underpay in another area, the two won't cancel each other out. The best approach is to track your accounts carefully and pay the amount you owe.

3. Incorporation Will Give You Tax Breaks

If it makes financial sense for your business to incorporate, you should—but in general, there's no tax benefit involved. Incorporation is an expensive process, and it ensures you'll be subjected to minimum corporate taxes, which may be more than your income for the first few years.

4. Extensions Are Free

When you receive an extension on filing your tax return, the new deadline only applies to tax preparation and filing. However, payments are still due on the original date, and if you wait to pay, you might be hit with expensive fees.

5. You Shouldn’t Take the Home Office Deduction

In the past, deducting a home office was a good way to flag yourself for an audit. Now, however, home offices have become much more common, and the IRS can't investigate all of them. Still, you should only take this deduction if you actually qualify, and keep thorough records to prove it.

If you take tax planning seriously and do your research, you'll complete your tax return correctly and accurately. Bergamo Tax & Financial Solutions in Watertown, CT, offers experienced accounting services, including payroll, financing, and tax planning. Keep your business accounts in order with their prompt and professional service. For more information on how they will help you, call (860) 274-1655 or get in touch with them online today.