Filing Tax Extensions Every Year
One of the biggest blunders small business owners make is not learning from last year’s mistakes. For example, some businesses file for extensions year after year, and the last thing they want to think about in September is paying the government and digging into numbers from over a year and a half ago. Take the time to get it right and file on time. You didn’t particularly enjoy paying penalties and interest last year, so start making estimated payments now to eliminate that headache.
Mixing Business And Personal Expenses
Imagine if you got to deduct every dollar spent on groceries, rent and every night out with friends when you filed your personal taxes — essentially calculating a personal net income. In this imaginary world, you’d be taxed on that number, rather than on all the money you made per your W2 and 1099s. However, if you’re constantly buying business items on personal cards and vice versa, deciding “well, this meal was for a client, and this one wasn’t,” you’re essentially cheating the system, which can get you in serious trouble with the IRS. Avoid this situation from the beginning. Set up different bank accounts and credit cards for business and personal expenses.
Preparation is key when it comes to taxes. Instead of waiting for your tax accountant to email you a request list two days before your filing date, send them an email in early 2017 asking to hop on the phone to discuss what they’ll need from you. Have your financials in shape to hand over to your tax accountant, but also for you to analyze and help make better business decisions. Taxes are not that painful if you are prepared.
