Are These Tax Filing Mistakes Draining Your Revenue?
By Meir Graham FEB. 23, 2020
It’s tax season once again and the clock is ticking, with real consequences if you don’t file your taxes by the March/April 15th deadline. But the focus here today is not whether you file or not but HOW you file it!
I’m going to be shedding light on tax filing mistakes most small businesses make and how to avoid them. Not all are mistakes, some are just a problem of asymmetric information; business owners not knowing certain day-to-day expenses were tax-deductible.
Some of these mistakes include:
Mixing Personal Expenses with Business Expenses
If your business mixes personal expenses with business expenses when filing taxes, you could get yourself in trouble. So, make sure you keep your business and personal expenses separate, as it will help you come tax time.
Filing the Wrong Business Entity Structure
One of the biggest mistakes most small businesses make when doing their taxes is filing the wrong entity structure for their business.
Many times, an entity can be changed retroactively
Many people think they'll pay less in taxes if they form a particular type of business entity, but this isn't necessarily true. It's always a good idea to review your current business tax structure with your tax preparer/accountant or seek advice prior to selecting a business entity for new business owners.
There are so many small businesses and individuals out there that are unaware of the additional expenses they can deduct. Things like mileage, supplies purchased on your own or expenses incurred from working remotely can all be deducted depending on your situation. So, do check with a professional for a list of tax-deductions in your business.
Why You Shouldn’t Prepare Business Taxes Yourself
Doing your tax isn’t one of those home improvement chores you look at YouTube, DIY and scrap it if you don’t like it. Getting it right would ensure you don’t hear from the IRS at all. While making a mistake, would have them reaching out and putting their hands in your pockets
If doing the books and tracking the numbers isn’t your thing, please hire an expert to do it. There is no point in getting yourself in trouble, over something you can avoid.
Hiring a tax expert is like hiring a plumber for your leaky faucet. The whole thing can be done correctly in no time and potentially save you a lot of money in the long run.
Maximize Deductions and Increase Your Refund
Tax experts can help you find the correct deductions and prevent you from getting into trouble. Those savings and peace of mind alone can pay for themselves.
If you got married/divorced, had another child or lost a spouse, you might need help finding the best filing status for that year.
Many people forget to mention the “small” things especially if it occurred earlier on in the year – did you move, purchase a new car, take out a loan, make home renovations, take an educational or training course, etc. Many of these changes can affect your tax refund so it’s always good to consult with a specialist. They can provide you with the best refunds allowed by law.
Save Time and Energy
It’s not a whole lot of time left till March or April 15th, so, outsourcing this time-intensive task to a professional that would also do a better job isn’t a bad idea.
And even if you decide to do it yourself, you still might want to keep a tax professional at arm’s reach as you'll probably have a few questions as you go along.
Preparing your own returns can take a lot of time. The IRS estimates that the average person will require about 11 hours to prepare a 2020 tax return. If the average person takes 11 hours, how long would the average business take?
New Rules and Policy Changes
You might need a professional to prepare your 2020 return, even if you consider yourself a tax-savvy person because the Tax Cuts and Jobs Act (TCJA) made some changes to the tax code when it went into effect in 2018.
Standard deductions pretty much doubled after the law went into effect, and this might make itemizing, a less attractive option to taxpayers who have taken that route in the past, mainly because the changes were made to quite a few itemized deductions as well.
For example, the state and local property tax deduction (SALT) has been limited to $10,000 combined. The casualty and theft loss deduction has been repealed, except for taxpayers who suffer a loss due to a disaster area declared by the U.S. president. Personal exemptions have been eliminated from the tax code as well.
Therefore, you might be better off hiring a tax professional to make sure your return is right — especially if itemized deductions are a high priority for you.
CPA vs. Enrolled Agent – Who Should Do My Taxes?
As far as which tax preparer you should go with, you have the CPA and the Enrolled Agent. Both who can prepare your taxes. But the question is which one of them is ideal for you and your business?
A CPA is licensed by a state agency and usually have their hands in an array of financial activities that may include taxes. An Enrolled Agent, on the other hand, is certified by the IRS. They specialize in taxes and are authorized to speak for taxpayers in IRS hearings and audits.
Hence, going with an enrolled agent like Reliant Taxes is ideal for you as far as tax preparation is concerned.
Who is Reliant Taxes?
Reliant Taxes is owned and operated by IRS Enrolled Agents that are available all year to provide you with services in all matters of personal tax, business tax, and accounting.
Some of our services include tax planning, tax resolution, debt settlement, small business accounting, business formation, and business consulting.
Individual Income Tax Preparation
We take our time to explain to you exactly what's on your tax return. We make sure you are more informed about your taxes when you leave our office. Offering one-on-one explanation and guidance is one of the things that sets Reliant apart – that human connection you can’t get from a software or most tax professional.
We offer in-office on the spot tax preparation as well as drop off and remote services.
Business Income Tax Preparation
Income taxes for businesses can be quite complex with multiple depreciation schedules, pass-through entities with separately stated items, capital contributions and distributions, shareholder loans, and so on.
There are many requirements with far-reaching consequences that the average accountant may not know about. There are also little-known deductions businesses can take advantage of but some depend on the type of business entity. We put in the extra time to fully explain the tax return, implications, and all options available for the owner/officers.
Do You Have Problems with the IRS?
If you have problems with the IRS, don’t worry, you’re not alone. Reliant’s helping hand can help resolve your tax problems and put an end to the harassment. We are very efficient, affordable, and of course, extremely discreet.
Tax problems don’t go away on their own; they just keep getting worse. If you owe the IRS, do not face them alone.
Now you’ve learned how hiring a professional like Reliant Taxes can help you:
Reduce Tax while increasing asset protection
Increase legal compliance
Access money needed to grow your business
Increase Your Refund, and
Avoid common tax filing mistakes
What You Should Do Next
Now it’s all about ACTION! Head over to the next page to book a quick consultation call to have all your questions answered and receive proper guidance.
Take action now to avoid hearing from the IRS while legally maximizing your refund! Click the button below to schedule your call.
The information contained on this website is for general education purposes only and should not be used in any way as a substitute for professional financial advice. We suggest you get some professional financial advice from a qualified individual or regulated financial body before proceeding with your decisions.
© 2019 by Reliant Tax & Business Solutions.