Filing taxes is stressful for any individual, but it can be especially difficult if you are a small business owner. You could be subject to an audit, and miscalculating income could put a financial strain on your company. Below is a list of common mistakes to avoid as you tackle tax prep and how to avoid committing these errors with the help of an accounting service.

What Are the Most Common Tax Prep Mistakes for Small Business Owners? 

1. Combining Personal & Business Finances

Blurring lines between business and pleasure can be an easy mistake  but also a costly one that could get you audited. Creating separate accounts for work and personal expenditures will help to eliminate potential mistakes. Additionally, it is wise to apply for a business credit card to ensure business and personal finances are recorded on separate cards.

2. Inaccurate Reporting of Income            

Even if it’s not on purpose, neglecting to accurately report income may lead to an audit and potential tax penalties. Businesses that handle cash transactions are especially susceptible to committing this mistake. Working with an accounting service can help you stay on track. 

3. Not Paying on Time     

Failure to file or pay taxes can rack up penalties and fees, and while it’s a costly mistake, it’s an avoidable one. Try to file on time or file an extension so that you don’t receive a failure to file penalty. The IRS makes this easy to do and often grants extensions. If you realize a deadline was missed, get in touch with a tax defense professional as soon as possible.

4. Skipping Out on Deductions 

Business owners often are not sure what they can deduct which can lead to missed opportunities for tax reductions. According to the IRS, to classify as being deductible, a business expense has to be ordinary and necessary, meaning common expenses pertaining to your field of business. Examples of deductible business expenses include payroll expenses, office supplies, rent, and insurance. If you’re not sure what else you can deduct, hire an accounting service so you don’t miss any opportunities. 

If you need help with accounting services, Grayson Accounting has provided the St. Charles, MO, area with over 25 years of experience. They can tackle everything from cleaning up your books for tax prep to general accounting and payroll. Give them a call at (636) 233-7875 for a free initial consultation. Or visit their website to learn more about their QuickBooks consultation services so you can stay on top of your business’ finances.