Common Mistakes Small Businesses Make On Their Tax Return

You must agree that dealing with the accounting of any business organization, irrespective of their operational capabilities is probably one of the most challenging and confusing aspects. But there is an easy solution to this.

Why not hire a trained professional like a tax accountant who will assist with bookkeeping and calculate your tax burden, making it much easier for you to avoid penalties? Most tax accountants will also help you save taxes by implementing tax planning strategies catered to your business.

To help you avoid some basic errors that could prove to be costly, Cooley & Martin CPA - Services has put together a list of the most common mistakes businesses make with their accounting and tax reporting.

1. Not utilizing all of the allowable deductions
Small business owners make this mistake because of a lack of knowledge from the ever-changing tax code. It's always in the business owner's best interest to speak to a professional about using all the deductions and credits they are entitled to.

2. Mixing business and personal expenses
Using the same bank account and credit card for personal and business expenditures can lead to accounting mistakes and potential legal issues. Owners should want to correct this mistake in case the business is audited, and the IRS disallows personal expenses.

3. Not reconciling the bank accounts
Businesses should want to correct this to have accurate financials for profit analysis and tax preparation. Business owners should hire a bookkeeper if they do not have the bookkeeping expertise.

4. Overreporting or incorrectly classifying income
Again, this can be because of the lack of tax knowledge. It's important to speak to a professional to avoid overpaying on taxes and report business income properly.

5. Committing payroll mistakes
Business owners either try to do payroll on their own or receive bad advice, which can cause lost time and money from penalties and payroll tax audits. Businesses need a trusted advisor when it comes to payroll.

6. Forgetting all business tax obligations
There are many taxes businesses can be responsible for including payroll, personal property, and sales tax, just to name a few. This creates difficulties for small business owners, sometimes causing penalties and interest from late payments and filings.

To avoid these and other mistakes, reach out to the experts at Cooley & Martin Cpa - Services. We offer a full range of services to personal and business clients, including individual and business tax, bookkeeping, notary, payroll services, and more. Our expert team will work closely with you to design a path toward success.

We serve clients across Charlottesville, Lynchburg, Tuckahoe, Harrisonburg, Staunton, Waynesboro, Fredericksburg, Laurel, Glen Allen, Madison Heights, Culpeper, VA, and the surrounding areas.

Get in touch with us today!

For a complete list of our services, please click here. If you have any questions about tax and accounting, we’d love to hear from you. For more information, please call us at (434) 975-2663 or email us at info@gjccpa.com.