If you own a small business, chances are you didn’t start it because you love doing taxes. Tracking income and expenses to prepare accurate financial records is an important part of running a company, though, and will make filing taxes easier. To avoid making any critical errors along the way, it is also wise to hire a business tax accountant. Here are three tax preparation mistakes a CPA can prevent you from making every year.
3 Tax Mistakes Small Business Owners Should Avoid
1. Underreporting Your Income
Even if you do so inadvertently, underreporting your company’s income can have disastrous consequences. If the income you report does not match up with the IRS’s records, it will send up red flags, prompting an audit—or accusations of fraud. A business tax accountant will help you avoid this mistake by including all incoming and outgoing transactions that have been settled for that tax year when calculating total income.
2. Merging Business & Personal Expenses
You can deduct all kinds of expenses—as long as they are essential for running your business. If you attempt to deduct any personal expenses, though, the IRS is going to flag your return. The best way to avoid making this mistake is by using totally separate accounts for all business and personal expenses. If you used your personal credit card when the company was still in its infancy, for example, now is the time to apply for a business card and use only that account for all professional expenses.
3. Missing Critical Deadlines
Failing to make quarterly estimated payments or filing late can cost your business a lot in penalties and fees. Depending on the circumstances, you may have to make payments for years to come. Fortunately, such costs are 100% avoidable, especially if you make adequate financial preparations at the start of every tax year.
If you’re looking for a reputable business tax accountant in La Crosse, WI, turn to Tostrud & Temp, S.C. With nearly four decades of experience advising both individual and commercial clients, this accounting firm is committed to providing the highest quality services possible. They can assist with everything from audits to estate planning. To learn more about the ways they will meet your company’s needs, visit their website. Or, you can schedule an initial consultation with a business tax accountant on their team by calling (608) 784-8060.