Entrepreneurs are the backbone of industry. Without those who set out to start a business on their own, the giants of every sector would not exist as we know them today. One of the most important parts about being an entrepreneur is properly completing taxes each year. That is why this list of three common tax mistakes that every entrepreneur should avoid making has been created. These common tax mistakes, in no particular order, is as follows:
- Failing to separate business and personal expenses
- Filing too late
- Mathematical errors
Failing to separate business and personal expenses
While it may feel like business owners are always on the clock, it is very important to always separate business and personal expenses. This line can become a bit blurred at times, so it is imperative to refresh yourself on the true difference between the two. Otherwise, by attempting to deduct personal expenses for a business, entrepreneurs can quickly find themselves in hot water with the IRS.
Filing too late
Most tax filers know the date April 15th all too well. For corporations, however, the date March 16th should stick out. Some first time business owners fail to realize that the tax schedule is different for companies than it is for individual citizens. Even if an entrepreneur shows every intention of completing their taxes, if filings are late, a penalty will be enforced.
One of the most common mistakes on tax returns of all kinds are simple mathematical errors. While the errors are rarely intentional, the consequences can be very real and serious. Not only should business taxes be checked and double checked, but larger businesses should consider hiring a professional to ensure the match is correct. For smaller business owners, there are a number of business tax software programs available for use. These tax software programs can greatly decrease the possibility that a mathematical is made and further investigation into the tax return is required. However, asking for a professional’s help and insights could still be beneficial, regardless of the company’s size. After all, math mistakes can seem so trivial, but they have always been taken very seriously.
No one enjoys taxes. However, they are necessary and doing them correctly the first time rids business owners of hours of unwanted headaches. By following the above listed tips, among many others, business owners can complete tax returns without a second thought.