Common Tax Mistakes Small Business Can Make

Running your small business is rewarding in many ways but navigating all of the taxes for a small business can take the reward right out of it. There are too many things that can be forgotten, unknown, or mistaken- a wrong deduction here, a missed credit there, and suddenly that little mistake is drowning your business. Here are a few of these common tax mistakes small business can make, be sure they aren’t yours!

Tax Authorities You May Owe

Many small businesses have no idea how many authorities they should be paying taxes to. In addition to the federal and state income taxes, here are some other taxes you may owe:

• sales taxes
• property taxes
• payroll taxes
• local and municipality taxes
• excise taxes
• self-employment taxes

Take some time and educate yourself about which taxes you may need to pay. A good accounting firm can help you sort through who and what you may or may not owe! In Idaho Falls, Poston, Denney, & Killpack, PLLC will be glad to help you determine who these are, how to file, and if need be, how to pay them.

Ignoring Self Employment Taxes

Don’t assume you don’t have to pay this tax! If you net more than $400 from your business, most of that money will probably be subject to this tax. Penalties and interest can add up quick if you neglect this tax. Paying it quarterly will avoid a big payout at end of year tax filing.

Doing Your Own Payroll

You may think you are saving money by doing in-house payroll, but this can be a very costly common tax mistake. Not only is it time consuming and complicated, but it is also a common way to defraud employers through payroll checks and tax returns, not to mention filing mistakes and improper payments. To avoid penalties, just outsource this job.

Missed tax credits

Another common tax mistake is to miss tax credits. There are a lot out there, and since running your business will take up enough of your time, you don’t need to also be sifting through all of the current tax laws looking for these. Some you may be missing:

• Small business Healthcare tax credits
• Tipped employee payroll tax credit
• Domestic production activities deductions
• Tax credits for hiring disabled workers
• Returning Heroes tax credits for hiring veterans

These are just a few of many. Hiring an accounting firm is your best bet to help ferret out these credits, it’s their job to know!

These common tax mistakes can be fixed of course, by re-filing amended forms when you get an IRS notice, or by hiring your own oversight department, but those solutions are time consuming, and too costly or not feasible for most small businesses to do on their own. A better idea is to hire an accounting firm to do your taxes, correct mistakes, and keep them from happening again. Poston, Denney, & Killpack, PLLC can help you with all your small business tax concerns, and that peace of mind is it’s own reward.