As a small business owner, your plate is already full, but it’s important to make room in your busy schedule for tax planning. This will prevent some financial mistakes that could hurt your business in the future. Here are some common missteps small companies tend to make and why you should strive to avoid them. 

What Are Common Tax Mistakes Small Businesses Make?

1. Failing to Report Documented Income

The IRS documents and compares all tax information. Your tax planning should involve documenting all reported income and payments exactly as they are listed on official forms.

For instance, if you have a Form 1099-MISC that includes income that wasn’t actually made until the next year, you still have to document it. However, an adjustment can be made to specify that the extra amount is not included for the current tax year.

2. Paying Taxes Late

As a small business, it’s your responsibility to keep a separate account for taxes due each quarter and at the end of the year. Putting this money aside will prevent you from using it for other business expenses and ensure you pay taxes when they’re due. If you aren’t able to pay on time, it will result in late penalties that will increase until the return is filed.

3. Neglecting to Pay Estimated Taxes

As a sole proprietor, self-employed individual, partner, or corporation shareholder, you are responsible for making estimated tax payments if you expect to owe more than $1,000 when filing your return. Corporations are required to pay this if they owe more than $500.

Make it a point in your tax planning schedule to document these deadlines — April 15, June 15, September 15, and January 15 of the following year — to avoid paying any late penalties. Being aware of these dates will help you plan financially. 

Avoid any tax planning mistakes by turning to the experts at Balanced Bookkeeping & Tax Services. Since 1998, this firm has provided outstanding accounting services to businesses in Lincoln, NE. They provide insightful advice to all of their clients to help them make the best financial decisions. Visit their website or call (402) 466-4272 to learn more about their tax services.