16 Jul Don’t Take Unnecessary Risks With Taxes
It makes sense that so many business owners are nervous about filing their taxes. There are endless ways the process can go wrong – and no one wants to have the IRS come knocking. Unfortunately, it’s often small businesses that submit incorrectly prepared returns.
Think about it: most large businesses have a whole in-house accounting department. They have legal professionals on staff. They have people whose whole job it is, year-round, to make sure the business is up-to-date on the latest accounting rules and regulations.
Meanwhile, most small businesses are self-employed, partnerships, or S corporations. This means that any income, loss, deductions, and credits are passed through to the owner’s 1040.
In these cases, mistakes on a business return are typically repeated on the individual return.
The US tax code is full of penalties—easy traps for self-preparers or non-experts to fall into.
If you are not familiar with accounting practices, not properly educated in the field, or not investing substantial time and resources to keeping up-to-date on tax law (like most small business owners) the likelihood of making costly mistakes is exceedingly higher.
Even one small error can cause endless grief and financial damage to businesses and their owners—but enlisting a reputable tax professional can easily prevent this.
The good news is there are many simple ways for small business owners to minimize risk when it comes to their taxes.
Implement a proper billing system and set of computerized books and be consistent with the entries.
Stay on top of receivables.
Run frequent profit and loss statements to monitor progress and make adjustments when needed to stay profitable.
Finally, hire a CPA or accounting professional. This cannot be overstressed.
Whether someone provided you with a referral or you are coming in fresh with internet research, reviews and testimonials are a great starting point. They’re transparent, come from real people, and provide valuable insight about what it’s like to actually be a client of that professional.
What are their qualifications? Do past and current clients speak favorably of them? All these considerations (and more) are vital issues you’ll want to research to ensure you make the right choice. Go ahead, check DeHoek & Company, PLLC, out if you are looking for a CPA, EA or ABV.
by Lee Reams