Business owners often have to perform a wide range of tasks for the company that they start and run. While you may not have had any experience with financial record-keeping before you started the business, you may start to perform minor accounting tasks as a way of keeping costs low for your company.
Software can make it easy to track account balances and withhold the proper amount of employment taxes. It’s only natural that those who handle their own financial records may also decide that filing their own taxes for the business would be an affordable alternative to paying hundreds of dollars for professional accountants to prepare the tax return.
Unfortunately, choosing to handle the tax paperwork for your company could leave you vulnerable to some of the most common mistakes made in business tax filings. Even if you use cutting-edge accounting and tax preparation software, trying to prepare your own taxes could prove to be a costly mistake.
Know what common tax mistakes to watch out for
When individuals file business taxes, they often apply the logic of personal taxes to business taxes. Newer company owners may not even have gotten everything in place yet for a proper tax filing. Did you take the important step of securing an employer ID number? Without that or your personal social security number, depending on the structure of the business, you could wind up having your company tax return rejected.
It’s no surprise that mistakes with the math itself can lead to all kinds of problems with tax returns. Forgetting to carry the one or adding when you should subtract can quickly result in massive mistakes regarding the amount of taxes you believe you owe. However, confusion about what deductions you have the right to claim can also result in accidentally underpaying taxes.
Forgetting to sign the documents or not putting the final figures in on the necessary lines are also common business tax mistakes that can increase the likelihood of the rejection of your tax return or another serious tax-related issue for your company such as an audit or letter notifying you of an underpayment.
If you’ve made a tax mistake, you may need legal back up
Don’t compound your initial mistake of trying to handle a complex professional issue on your own with minimal training by doing the same thing with the potential legal consequences of underpaying your taxes or making a major mistake on your business tax return. If you try to defend yourself and fight the allegations on your own, you may find yourself not only waging an uphill battle but also trying to handle everything on your own while still running your own business.
An experienced attorney who understands business issues and tax law can help you make things right with the IRS or file the necessary corrected paperwork before any formal issues arise.