Top 5 Tax Mistakes Small Business Owners Make
Receiving high quality small business tax help remains one of the key to-dos for many business owners, simply because they don’t know how to effectively handle the process on their own. Many mistakes are made, both at tax time and throughout the year, which could add up to penalties, extra money due, and plenty of hassle, stress and complication along the way.
Learn from the following five mistakes to correct some of the largest and most common issues an experienced small business accountant warns against.
1. Underpaying Estimated Taxes: Staying atop of estimated taxes is difficult, but failing to do so leads directly to an underpayment penalty. For those who earn $150,000 or less, their estimated taxes must add up to at least 90% of what they will owe for the year, or 100% of the previous year. For those who earn more than that, they must pay at least 110% of the previous year’s payments.
2. Filing & Paying Late: Filing and paying late only gets a person further behind. Penalties quickly expand up to 25% for simply filing late, and up to 47.5% for filing and paying late, not to mention add-on penalties for fraud or inaccuracies. A qualified small business accountant will first and foremost ensure that all deadlines are met, and that no penalties accrue.
3. Not Outsourcing Payroll: Payroll quickly becomes more complicated than many small business owners realize. Payroll taxes and filing requirements aren’t always easy to understand, and are one of the most common ways that mistakes are made with small business accounting. Outsource to an accountant or payroll company for a small fee and let them handle the legwork.
4. Limited Communication with Accountant: Saving money and avoiding costly errors with taxes isn’t just a job for the two crazy weeks in the beginning of April each year. Many professionals recommend at least a monthly check-in with a small business accountant to stay on the right track, but any increased level of year-round communication is a massive improvement from the once a year last-minute rush.
5. Failing to Send 1099s: Any contractor, along with certain other individuals, who’s paid more than $600 in the course of a year, must receive a 1099-MISC. The small business needs to send them a 1099, and also needs to send the proper form to the IRS as well, and these deadlines are well in advance of when taxes are due. Failing to do so leads to extra costs and penalties, not to mention the IRS having their radars up about a business that isn’t handling their taxes properly.
It’s time to stop playing catch-up and finally get ahead of the curve when it comes to small business accounting. For experienced, reliable and knowledgeable small business tax help, call Margida & Associates at 330.926.0023, or visit www.Margida-Assoc.com to learn more about how we may be able to help.