Don’t Make These Tax Mistakes That Could Cost You

Don’t Make These Tax Mistakes That Could Cost You

Small businesses can be quite lucrative and many Americans are attracted to these opportunities. Along with the running of a business comes tax ramifications. Outlined below are several components of business tax preparation that you will want to keep in mind.

Mistakes Related To Lack Of Business Tax Knowledge

There are many areas of the business tax code that the average business person may not keep abreast of. One of these is the choice of business entity. You can establish your business as a limited liability company (LLC), an S corporation, a C corporation, or a sole proprietorship. Each of these is taxed in a different way. 

Another mistake is made when people combine business activity with the personal or family business. This can cause major headaches and confusion when preparing your returns. Make sure to keep these two areas completely separate from a financial perspective.

Thirdly, you may simply be unaware of some deductions or credits that your business is entitled to. These can lower your tax burden in a major way.

Mistakes Related to Various Types of Errors 

Some business tax mistakes can be attributed to errors in memory, planning, or ethics. Some of these include:

• Not having an accounting system in place 

• Not reporting all business income 

• Forgetting to make estimated tax payments 

• Fling your returns after the proper deadline  

Mistakes Related to Not Partnering with a Professional

Perhaps the best way to pay the least amount of tax that you legally owe is to work with a competent tax professional.  The tax code is huge and few people know all that is in it. A professional makes it their business to know the code inside out.

For your business capital needs, consider partnering with Toluca Lake Capital. They can help you choose the best solutions that can be optimized for your business tax situation while at the same time keeping you on track to achieve your business goals.