Written by: Brielle Regdos, Content Writer
Turning the bore of Business Taxes into the foundation of a blooming success for your business.
In the previous blog, we covered Business Taxes - Common Mistakes and How to Avoid Them. We reviewed that paying business taxes is essential for legal compliance, supporting business growth, and for effective financial planning. Understanding taxes is key to managing cash flow, creating accurate budgets, and planning for long-term financial stability. Avoiding common mistakes is salient, but what are the steps in doing so? Where do you begin and what are a few simple do’s and don’ts surrounding this? These may seem straightforward, or they might need a little more clarity.
Here are a few Do’s and Don’ts when it comes to managing business taxes.
Do:
Keep Detailed Records
Maintain accurate and organized records of income, expenses, receipts, and invoices
Understand Your Tax Obligations
Be aware of the taxes your business is subject to, such as income tax, sales tax, payroll tax, and self-employment tax
Separate Business and Personal Finances
Keep your business and personal finances separate by maintaining separate bank accounts
Take Advantage of Deductions
There are numerous tax deductions available for businesses, be sure to claim all legitimate deductions
Work With a Tax Professional
Consulting with a tax accountant or advisor can help you navigate complex tax laws and avoid costly mistakes. They can also help with tax planning, so you minimize your tax liability.
File Taxes on Time
File your tax returns and pay any taxes owed on time to avoid penalties, interest, and potential audits
Don’t:
Mix Personal and Business Expenses
Combining personal and business expenses can lead to confusion, missed deductions, and potential issues with the IRS.
Overlook Tax Deadlines
Missing tax deadlines can lead to late fees and interest. Make sure you're aware of important filing and payment deadlines for your business.
Claim Personal Expenses as Business Deductions
Be cautious not to mistakenly deduct personal expenses as business ones. For example, you can’t deduct personal groceries or household expenses as business expenses unless you have a legitimate reason and documentation
Ignore Sales Tax Obligations
Many businesses are required to collect and remit sales tax, especially those that sell physical goods or certain services. Failure to do so can result in penalties.
Forget to Account for Self-Employment Taxes
If you’re self-employed, don’t forget to account for self-employment taxes (Social Security and Medicare) in addition to income tax.
Neglect State and Local Taxes
In addition to federal taxes, many states and localities impose their own taxes. Be sure to understand and comply with the tax rules in your jurisdiction.
Ignore Business Tax Changes
Tax laws change regularly, so stay informed about any new tax rules or regulations that could affect your business. This includes any tax incentives or credits that might benefit you.
Secure your blooming business by taking these do’s and don’ts into consideration. Being smart with your decisions will benefit your business in the long run and understanding these business tax tips will be your next step into growing your successful business.
Trust the Experts at EnTune Financial Services
enTune Financial Services offers a comprehensive suite of financial compliance services, including business tax compliance and regulatory compliance consulting. When it comes to maintaining your business’s financial compliance, you need a team with the knowledge and experience to mitigate your risks. Contact enTune Financial Services to find out how we provide comprehensive financial compliance services for companies just like yours.
