As a small business owner, navigating the tax code, obtaining all the required permits, and maintaining the right records are serious challenges. Whether you are just opening your doors and need California seller’s permit verification services or you have an established business that needs to avoid the most common pitfalls, these tax tips for small business will help.
Forgetting, Omitting, and Procrastinating
With the many business decisions and daily operations to be managed, it is easy to forget or put off financial action items, so be wary of these errors of omission:
1. Delayed Recordkeeping
When business owners don’t update financial records, reports, and associated tax documentation immediately, accuracy suffers. Of the small business mistakes to avoid, not keeping accurate records is at the top of the list. Bookkeeping errors might cause you to over- or under-report business income, resulting in a failure to pay a penalty.
2. Missing Tax Deadlines
A day late and a dollar short never plays well with tax officials. Filing business taxes late, even with an extension, can rack up fees, including a hefty IRS late payment penalty. If your business is already behind, a payment plan will significantly lessen the fees incurred while you catch up.
3. Neglecting to Carryover
There are unused deductions and tax credits that need to be carried over to the next year’s taxes. Keeping track of the remainder after first-year business taxes are filed will make sure that your business gets the full credit for startup expenses.
Good Intentions Gone Astray
Not every business owner can be an expert on how to do small business taxes. With the best of intentions, many entrepreneurs make these common mistakes:
4. Choosing the Wrong Business Structure
Sole proprietorships, partnerships, and corporations are all taxed differently. Deciding which best fits your business model might require some advice from a small business consulting service or CPA.
5. Mixing Business and Personal Expenses
When you run a small business, you may never really feel like you are away from work, but the IRS sees a clear line between your personal and business expenses. Be sure to keep detailed records documenting all business expenses to avoid an audit or a penalty for late taxes.
Just Missed It
Even the savviest small business owner can’t know everything. These common tax mistakes stem from simply not knowing about the available opportunities and services:
6. Missing Deductions
Keeping those accurate records will help your tax professional to guide you on what expenses should be deducted on your business taxes, and take advantage of tax credits or perks you didn’t know existed.
7. Verifying Permits and Tax-Exempt Status
New business owners sometimes fail to verify the permits and documentation of those with whom they do business. The California state sales tax commission considers it your responsibility to verify the current tax-exempt status of your customers, or you may have to pay the sales tax due yourself.
When in Doubt, Get Expert Help
One of the best ways to avoid these small business tax mistakes is to take advantage of a professional service like FastFilings, which can streamline the application process for a seller’s permit and perform a California seller’s permit verification to protect your bottom line.
Contact us today to make sure your permits are in order and your next tax season for small business is a breeze!