Hello! my name is Harry and this is my accountancy blog. It is my mission to use this blog to educate others about the benefits of hiring an accountant. I hired an accountant last year and doing so has brought many positives to my life. I now find it much easier to run my business and to manage my tax returns at the end of each financial year. I hope that by reading the articles I have posted here, you will gain a good understanding of how an accountant can help you. Thank you for stopping by and checking out my blog.
Making errors is human nature, but in the tax world, a mistake could have severe consequences. Problems in your tax returns could mean delayed refunds or penalties. Rushing to file your taxes could result in errors that will have dire consequences. The filing should be handled with diligence to avoid making errors that will strain your company's finances.
Paying taxes could be a significant expense for your business. Making a mistake and overpaying could cause a strain in the running of your company, and might open doors for audit, which could mean paying even more. Avoid such issues by familiarising yourself with these three tax filing mistakes.
Failing to Understand How to File for Start-up Deductibles
Businesses are liable for start-up expense deductibles. It is paramount to report the right amount you used to avoid any issues in the future. New businesses overlook expenses like rent and setting up a website. Ensure you are clear on the total amount you used to set up your business. Having the correct amount will help you avoid making mistakes when calculating the tax deductibles.
Not Classifying the Employees Correctly
In case your business hires employees, you have to understand the class they fall under when you file the returns. There is a huge difference between an employee working for you full-time and an independent contractor who is assigned to handle specific tasks. The difference affects how you file your tax and how you make payments.
When filing your business's tax returns, you should not withhold any taxes from independent contractors, but you do need to withhold employee income tax. Classifying your full-time employees as contractors might result in you making a mistake on your taxes.
Not Separating Personal and Business Expenses
Another mistake people make is to assume their personal and business expenses are the same; however, failing to separate the two costs might raise a red flag for the auditors. Separating the two accounts will give you an easy time tracking the deductible expenses, and will also make it easier to navigate an audit.
When filing your business taxes, deduct only the business expenses. You will likely face issues in the future if you deduct personal costs. Therefore, it is best to file your personal and business tax returns separately.
Tax deductions make the whole process of filing tax returns more bearable. Working with a tax accounting service will guarantee the filing is done right and on time. The tax experts will also identify all the deductibles you are liable to get.
Share31 August 2020
