Ways of Avoiding Common Business Tax Errors
Payment of tax is important to any business as it keeps the authorities off your back. You do not want the authorities to be chasing you because you have not done your due diligence.
Your business will operate without interference from the tax authorities if you have a good record of tax paymentcheck it out!.
Any business tax mistake that might occur when filing your tax returns should be rectified as quickly as possible. One of the imminent mistakes is the late filing of returns which will attract penalties.
When filing business tax returns, there is always the possibility of oversight so always be careful. In this article are some of the things you should do to avoidmore the common business tax mistakes.
It is essential to always be sure of the tax return deadline to avoid late payment. Business can be taxing to the point that you forget to remember the deadline for filing your tax returnshomepage.
That is why just as you have a day for paying your employees, you should also include in your records the day for filing your returns to avoid late payment of taxes.
You will be forced to pay a fine for late payment of taxes. To avoid these penalties, you should have your secretary always remind you of the deadline.
Another common business tax mistake you should avoid is misclassification of your employees. Always make sure that when you hire a contractor, you classify them accordingly.
How much you control a contractor will tell whether they are employees or independent contractors.
You will always have limited control over an independent contractor so make sure you do not misclassify them or else you will be caught on the hook for a lot of money. The payments should also be classified separately on the business’ tax return form.
You should also classify your business and personal expenses separately. This can be a real mess up and will cost you a lot of money to rectify.
Because it is a quick way to pay for expenses, many people end up paying for all their personal and business expenses using the same credit card. Mixing of the business and personal expense is likely to attract a penalty on your business.
It is necessary, therefore, to have a separate business bank account with its own business records.
It would be best if you open separate accounts to make it easy for you when filing tax returns. If you choose to use the same credit card for both personal and business expenses, you should make sure you have the records of each expense.