Filing taxes as a small business owner is more complicated than filing as an individual. If you avoid these tax mistakes, you could save your business a lot of money during tax season. Read how much tax mistakes really costs.

Filing taxes as a small business owner is more complicated than filing as an individual. If you avoid these tax mistakes, you could save your business a lot of money during tax season. Read how much tax mistakes really costs.

 

Common Tax Pitfalls Can Incur Penalties and Fines

Besides the common mistakes everyone can make – such as filing late, misreporting income, and overstating deductibles – there are several ways you could cost your business money if you aren’t aware. Approximately 40% of small businesses incur about $845 each year in IRS penalties. Don’t pay more to the IRS than what you need to pay.

One of the most common business tax mistakes regards payroll taxes. Make sure you submit payroll withholdings every month or every other week (talk to your accountant to know when this needs to be done for your business). Resist the urge to misclassify your employees as independent contractors – not only will you pay a ton in penalties when the IRS finds out, but you could also face criminal charges. Treat your employees right, and they’ll be more loyal, productive, and save your money anyways! Check out the IRS’ website to learn more.

If you are a sole proprietor, self employed, a partner, or an S corporation, you will need to file quarterly estimated tax payments to the IRS. Thinking you can just wait to pay taxes once a year could incur heavy penalties and accumulative late fees for each unpaid quarter. Talk to your advisor or tax accountant about the details of your unique needs.

Belonging to certain business classifications will also determine if you will combine your business and personal expenses or if your small business needs separate tax filings. Check out our handy blog post to learn more. The good news: as long as you keep diligent records and don’t misreport personal expenses as business expenses, you could be able to deduct more than you would filing your business as an independent entity.

Don’t Miss Out on Deductibles

This is the fun part: getting to save money! Ignorance is not bliss when it means missing out on write-offs. You shouldn’t have to pay more in taxes for things you are able to get deducted – such as a home office, business travel expenses, up to $5,000 of start-up costs, new equipment and depreciation of assets.

Owning a small business, especially if you have a home office, comes with some perks when it comes to tax write-offs. There are a lot of things that count as business expenses, and you should make the most out of the opportunity to save yourself and your business some money.

It is important to remember to keep detailed financial records to back up what you claim as business expenses. Protect yourself from audits by keeping your records for more than your current fiscal year, being honest with your taxes, and by going over your finances with a professional.

When in Doubt, Consult a Professional

If your small business is only a few years old or just overwhelming for you, seriously consider finding a tax professional to guide you through your taxes. Work closely with your accountant so you are aware of what your taxes look like. Take a look at this list of affordable tax resources. If you don’t have an accountant, look for a Certified Public Accountant (CPA) through state-run organizations such as CalCPA. Having professional help is worth the extra time and effort, you will save yourself stress and potentially a lot of money!

 

For information about Opportunity Fund’s small business loans, please contact us at 866-299-8173 or loans@opportunityfund.org.  For questions about your existing loan or other customer service questions, please contact us at 866-299-8173 or sbhelp@opportunityfund.org.


Opportunity Fund is tackling economic inequality so that hard work and perseverance means a shot at getting ahead, not just struggling to get by. Our programs are supported by a community of donors and investors whose contributions help to fund small businesses, support college students, and build stronger families and vibrant neighborhoods. Since 1994, the team has deployed $600 million and helped 20,000 families earn, save and invest in their own futures. Opportunity Fund has earned a 4-star rating from Charity Navigator, America’s largest independent charity evaluator, for our commitment to accountability and transparency.

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