Tax-related mistakes can lead to staggering fines and penalties. If you own a business, time for you is a precious commodity. You must run and grow your business and you cannot lose time staying updated about Beverly Hills tax accounting rules and regulations. However, accounting is a vital function in business and any mistake made can put your business at risk. A CPA can ensure you do not make the following mistakes:
Not Filing the Proper Forms and Payments
Depending on your business structure, your industry, and whether you have workers or not, you must file and send some forms to the IRS or state tax department. You may need to file some forms like estimated income tax, payroll taxes, and sales tax every quarter. To ensure you don’t overlook some forms or payments, set up reminders through your accounting software. Another option is to have a CPA set up a yearly calendar.
Reporting Your Income Carelessly
As a business owner, you may need to make tax payments every quarter according to your current-year estimated tax bill. Underpaying this bill can lead to a penalty of 20%. Thus, you need to be as accurate as possible in your tax bills and payments. If the IRS discovers that you intentionally tried to defraud it, you could face a 75% fine.
Not Separating Business and Personal Expenses
Tax deductions only apply to business-related expenses. You can only apply such deductions properly if you separate your business and personal finances. Thus, you need to have a separate bank account for your business and use only a business credit card when buying stuff for your company. Using personal assets like a home office or car for business, keep detailed records to support the deductions you take.
Not Keeping and Organizing Records Properly
Even if your business is not obliged to file quarterly, handling taxes should not be done until the last minute. Otherwise, you could miss out on legitimate deductions for failing to track your spending. A lot of software programs can help you with this. A skilled tax accountant can prepare your tax return and ensure you stay in control of your finances.
Failing to Take the Proper Deductions
Tax deductions are ordinary and necessary expenses you incur as you run your business. Taking deductions for wrong expenses can trigger an audit. If you are caught, penalties are severe. To avoid this situation, allow an accountant to take care of your taxes.
