Categorised | Money, Small Business

Are You At Risk Of Making These Mistakes On Your Business Tax Return?

Are you setting enough aside?

Are you setting enough aside?

We’re here to talk about the much-dreaded tax return. Is there a more hated word in the small business vocabulary. Heck; is there a more hated word in all language? If there is, we haven’t heard it yet. We all feel the pressure of upcoming tax forms. This is especially the case when you’re filing for a company rather than just yourself. Suddenly, you’ll have so much more to think about. Not to mention that you’ll be accounting for a whole load more money. That alone could end up making you hot under the collar.

That fear only gets worse when you consider everything businesses get wrong when it comes to their tax returns.  Even big names make significant mistakes here. That doesn’t bode well for you, with inexperience and first-time nerves working against you. Luckily, we’re going to look at a few common mistakes you might make, and how to avoid them.

You haven’t set enough aside

Around 32% of companies fall foul to not having aside enough to cover their tax returns. This causes them to dip into profits elsewhere. That can even lead to them clearing themselves out. The fact is that you’re sure to owe more than you imagine, especially if you only have personal returns to go off thus far. Your best bet to weathering the tax return storm, then, is to set money aside for this through the year. A good way of doing this to start with may be to use one of many tax calculators out there to estimate how much you might owe. Keeping your accounts together using software like Xeppo, as discussed here by Umlaut, could also help you here. By giving you a birds-eye-view of every aspect of your business, such software can ensure that you consider the whole picture. That includes your tax allowance.

You’re mixing business with pleasure

Another fatal mistake would be to mix both your personal and business finances. This is yet another reason it’d pay to develop a separate system for business finances. If your business is a corporation or independent entity, you can’t risk slipping so much as one piece of personal finance into that return. Make sure, then, that your personal receipts are nowhere near your business office. One slip here could see your whole tax plan come crashing down.

You’re too keen to claim

Tax returns are the bitterest pill. Claiming things back is the best way to wash it down. However, you could soon trip over this, too, if you try to claim too much. Filing for things which don’t qualify could fast see you facing legal issues and hefty fines. As such, you need to be 100% clear on what you can and can’t claim from day one. Things like start-up cost up to $5,000, and even the cost of training counts here. But, things like personal transport and entertainment do not. Learn the rules and play by them to ensure your tax return journey runs smoothly every time.

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