Preparing your company’s taxes is one of the biggest challenges for a business owner. You’re an expert in your industry, not in small business tax preparation.
Taxes can be complicated, and there are potential pitfalls everywhere. Most experts recommend hiring a tax preparer in Mesa to ensure you’re doing everything correctly. But if you do want to learn for yourself, here are some helpful dos and don’ts.
Do Research the Benefits and Downfalls of Each Type of Entity
There are many potential entities to look into, including a sole proprietorship, partnership, nonprofit, C-Corp, and LLC, all of which have potential benefits and drawbacks. An experienced tax preparer can help you determine the best business tax entity for your company based on your financial goals, structure, and number of employees.
Don’t Mix Business and Personal Expenditures
Mixing up business and personal expenditures is a common mistake that stands out as a red flag to the IRS. Don’t try to deduct expenses that aren’t business expenses, such as business dinners or your commute to and from work.
Do Maximize Your Deductions
You don’t want to blend business and personal expenditures, but you could also miss out on deductions without realizing it. For example, your home office does count as a deduction. You can also deduct auto expenses for business-related travel (not commuting). If you live in Arizona or nearby, hiring a service for small business tax preparation in Mesa can help you differentiate your business and personal expenditures.
Don’t Be Late with Your Taxes and Payments
Taxes can be daunting, and that’s on top of running your own business. It’s easy to miss a deadline, but that doesn’t mean it’s without consequences. You could face penalties for failure to file and pay, both of which are costly.
Do File and Pay on Time
Many business owners make the mistake of failing to pay and file on time. A tax preparer can help you get back on track, but remember that you should at least file, even if you can’t pay your taxes immediately. You could also get an extension if needed.
Don’t Neglect Your Record keeping
Keeping poor records and making mistakes on payroll may seem minor, but they could result in significant problems like lost deductions or an audit.
Do Get Organized
You need precise records for the IRS and access to every piece of paper, file, invoice, receipt, folder, and pay stub if you need to verify anything. And if you are audited, having clean records will come in handy.
Don’t Neglect Your Tax Obligations
Many business owners are worried about trying to determine their staff classification, deductions, and more, all by the IRS deadline. This can lead to errors in important tax filings that could get you in trouble.
Do Account for the Complexity of Business Taxes
There are a lot of complicated elements in small business taxes. You need to account for your payroll, property, local, excise staff, and self-employment taxes, just to name a few. A small business tax preparer can help you manage the complexity of your business taxes to ensure you’re covering all the bases.
Small Business Tax Preparation in Mesa
Small business taxes are no small job. If you’re unsure about your small business taxes – or it’s your first time filing them – work with a small business tax preparation service provider like M&M Accounting LLC. Contact us for free consultation!