When it comes to a small business, tax preparation is no easy feat. New York entrepreneurs make all sorts of mistakes when filing taxes on behalf of their commercial enterprises, some of which can have lasting consequences. Fortunately, it’s easy to avoid these common mistakes, provided the right information is available.
The U.S. Small Business Association recommends optimizing expense records as a means of warding off any tax discrepancies. This entails a regular review of all accounts, as well as things like receipts and other essential information. Professional assistance from an accountant may also be necessary, while some businesses prefer to keep track of their finances via accounting software.
Ensuring that deductions are accurate is another important factor in successfully filing business taxes. Some expenses are only eligible for partial deductions, and attempting to write off the total amount can land a business in hot water with the IRS. Conversely, don’t overlook less significant expenses when figuring out deductions. Minor expenses may not seem like a lot at first glance, but they can actually add up over time.
Entrepreneur also offers some tips on steering clear of the common tax mistakes made by small businesses. Knowing when taxes are actually due is of major importance, as many business owners erroneously believe that taxes must be paid on April 15. In fact, business taxes utilize a different payment schedule, in which taxes must be remitted on a quarterly basis. Businesses should also be wary of categorizing workers incorrectly. For instance, independent contractors must be classified differently on tax returns than regular workers. Failure to do so could result in an audit, which can be expensive and time-consuming for a business.