5 Lessons Learned:

December 27, 2020

Miscellaneous

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How to Avoid Common Business Tax Mistakes

Filing of tax returns is essentialread more here for your business as it keeps you in check with the authorities. If you want to avoid brushing shoulders with the tax authorities, you need to file your tax returns on time.

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. You can for instance file your returns late and there are consequences to that.

As a business owner, you should be careful when making tax payments to avoid possible business tax mistakes. You should read this article if you want to avoid the common business tax mistakes.

It is essential to always be sure of the tax return deadline to avoid late payment. Due to your tight business schedule, you rarely check the important dates on your calendar.

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. You can thus have one of your employees to keep tabs on such important dateslearn more so that the business can operate successfully.

You should also avoid misclassifying your employeesmore about. In a business, if you hire a contractor to do a job for you, make sure you clarify whether they are independent or permanent employees in your organization.

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.

It is also advisable that you avoid mixing your personal and businesses expenses. Any person that fails to separate their personal expenses from the business expenses is likely to pay a penalty fee to the tax authorities.

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.

You should, therefore, keep every expense separateread more now to avoid an audit from the tax authorities.

It would be best if you open separate accounts to make it easy for you when filing tax returns. It would be best to keep records of all your expenses, especially when you choose to use a similar account for all your expenses.