As the new year rolls on and you quickly wonder what happened to January, than you also realize it’s getting close to tax season. As a small business owner or prospective owner, then understanding your financials is critical to success. Part of the financial lifeblood of your company is proper accounting, which includes taxes.
The SBA recently distributed a report on How to Prepare for Tax Season, which includes a nice plan to help prepare your documents. If you are dreading tax time, then you are not alone,
40% of small business owners say bookkeeping and taxes are the “worst part of owning a small business.”
The report includes the common mistakes made by SMB companies. The biggest mistake is viewing taxes as a once a year event. Proper communication with your accountant over the course of the year will help the proper financial management and keep your documentation in order. However, the main mistake revolves around deductions.
Excessive deductions (36 percent) and mixing business and personal deductions (35 percent) are the main cause of audits, say accountants; misclassifying workers was cited by 14 percent of accountants.
Hopefully you started and grew your business last year. Taxes can be a pain, but they provide an opportunity to “reset” your financial habits and get back on track so next year is no big deal.