5 Mistakes Business Owners Make with Their Taxes

As a business owner, you know your taxes are only part of the bigger picture. Yet, taxes are something that you must deal with every year. Unfortunately, many business owners get caught unprepared for tax season due to some of the following mistakes.

Dealing with taxes and financials only once a year

It is vital to remember that any decision you make regarding your business daily can have tax implications. It can save you in the long run if you invest in an accountant or tax bookkeeper who can review your financials regularly, so you are not caught off-guard in tax season. 

Failing to apply deductions correctly

If you don't want to pay more in taxes than you owe, take advantage of business deductions. Your business may be eligible for various deductions. Some startups, however, also make the common mistake of overestimating how much of their startup costs are deductible. It's prudent to get help from a certified tax professional to avoid this mistake. 

Disorganized financials

Failing to keep proper records can lead to severe challenges when it comes to filing your taxes. To combat this issue, it's beneficial to get professional assistance or invest in accounting software that facilitates good record-keeping. 

Incorrectly identifying staff

It's all too easy to slip into the trap of incorrectly classifying staff members. Some employers may hire an independent contractor but have set specific stipulations that may cause this person to be an employee rather than contractor. Be sure that you understand the difference between an independent contractor and an employee. 

Mixing business and personal expenses

Perhaps the most common mistake for many business owners is failing to separate business and personal expenses. This often creates challenges when tax season comes around. Maintain separate bank and credit card accounts for the company and individual needs, keep receipts separate, and pay yourself a salary to avoid this issue.

To avoid these mistakes, it may be beneficial to hire an accountant or bookkeeper who can help to keep your business on track, especially during tax season.