Tax Mistakes That Can Trip Up New Business Owners

Taxes are something that we all have to file. One of the most common troubling financial situations for new companies is that they are one of the 1% of companies to have their tax return audited by the IRS. Audits can be costly and time-consuming, taking your attention away from the business. There are plenty of small and avoidable mistakes that can end up triggering these audits, so what can you do to avoid them?

Take the Time That You Need

One of the biggest problems is that people tend to only start filing their taxes when the deadline is bearing down upon them. This can lead to mistakes, even small ones, like leaving some missing information or making some mathematical errors. Follow a business tax calendar so you can make sure that you know exactly how much time you have to get everything prepared, and work at it every week.

Mind Your Receipts

If your business is racking up expenses, then it pays to make sure that you're able to report them as accurately and effectively as possible. People can get audited for unusual expense claims that they don't cover in enough detail, such as business travel for a business that doesn't normally take a lot of business trips. There are expense apps that can make it much easier to track your spending throughout the year, but you want to make sure that you're keeping your receipts or, at the very least, keeping a photographic proof of them. Back up any evidence of expenses that you do keep, of course.

Work with Someone Who Can Notice Red Flags

When you're filing your taxes, it's a good idea to make sure that you have a strategy for how you do it. If you work with professional tax preparation services, then you can have a chartered accountant ensuring that your returns are complete and as accurate as possible. CPAs can also act as advisors, the only ones legally qualified to provide tax strategy advice. This can mean maximizing your deductions to ensure that you take advantage of what expenses you are allowed, or it can mean a more conservative approach to avoid catching the attention of the IRS. There's no one better to help catch potential red flags in your tax filing than a CPA.

Be Diligent and Constant With Your Record Keeping

If there are any discrepancies or suspicious details that pop up in your tax return, then you may get asked for your records, and you want to make sure that they are as full and accurate as they can be. With accounting software, it's a lot easier to store and track the records, especially thanks to the fact that many of these software packages allow you to back up your records online. You want to make sure that you're tracking all income and expenses and adding new records to them each week if possible.

The most important tip of all is to make sure that you have the qualified help you need. Most business owners aren't experts in how the IRS work, after all.