Many business owners skip tax planning. Normally they don’t sit down and have a simple conversation with their accountant or financial advisor about the upcoming tax season. In some cases, business owners try the DIY route and end up losing more money by doing this than just hiring a professional.The following things will lead to costly tax bills for any business.
1. Electing the wrong classification. Most business owners who own LLC’s are unaware that they have the option to be taxed as a corporation or S-Corporation. By not chosing the proper tax election your business could be subjected to double taxation. If your LLC makes more than $30k a year , you should consider electing a s-corp, consult with a business tax professional for more information.
2. Missing deductions and credit. If you are a business owner, I can not stress the fact more…HIRE A PROFESSIONAL ACCOUNTANT ! You can not prepare accurate books and run a business. 70 percent of business owner miss over $2,000 worth of deductions each year. Hiring a professional firm takes the stress off. We provide our clients with a check list each year to remind them of what we need and what can or can not be claimed during the current tax season. The most common missed deductions of business owners are Expenses for Preparing Documents, Business Startup and Organization Costs, and Interest.
3. Believing estimated tax payments are optional. Taxes for a business owner is NOT just one day. This is a year round process that most likely require tax payments. This is another example of why a professional accountant is needed. Employees’ taxes are automatically withheld from each paycheck, but you might not have paid attention because no action was required on your part, especially if you have a paid payroll service. So when you its time to be responsible for your own taxes, the thought of estimated tax payments can seem scary and overwhelming. It is important to know that estimated tax payments are mandatory, and lack of payment on time, and in the right amount, can result in penalties and interest. A good tax professional/ accountant can help calculate and prepare your payments.
Again dealing with business taxes should be left to a professional business tax accountant. If you need help in any of these areas or any other area of business taxes, feel free to book a tax consultation so we can help!
