Tax Preparation Blunders Small Businesses Need To Avoid
The pressure and sense of urgency that tax time brings on small businesses often lead to mistakes that can sometimes be costly. You don’t want to be caught off guard when the time for submitting tax returns approaches. An accounting firm in Torrance, CA can help you with tax preparation services that are professional and affordable. Below are some of the tax preparation blunders that small businesses need to avoid:
Forgetting to write off the expenses of launching a business
When a new business is started, it is perfectly legal to write off any kind of expense that may have been incurred before the business begun operations. This could save you money that would be better utilized by putting it into the business.
Motor vehicle and transport expenses
Any sort of driving that constitutes business driving is a deductible expense. This includes driving to see a client or a supplier. While in business driving, one of the deductible expense is the fuel used, other expenses incurred in operating the vehicle such as oil change, tire change, insurance expenses, and even parking fees also all fall under deductible expenses.
Omitting petty expenditures
Petty expenses such as subscriptions to magazines, petty cash office expenses, client hospitality expenses and so on can all be forgotten in the course of tax preparation. It is important to put in place a way of tracking all expenses so that you can claim tax deductions on all the deductible expenses.
Exaggerating deductions
While it is important to take advantage of all the tax deductions available to you, you should avoid making the mistake of exaggerating. Doing so increases the likelihood of the IRS demanding an audit. One mistake commonly made is making the assumption that expenses such as costs of meals on business travel or gifts to clients are 100% deductible. On the contrary, only a part of such expenses are deductible.
It is only by having a professional offer you tax preparation services that will you get everything right and avoid the wrath of the IRS. Talk to ApplewhiteAccounting.com (Kimberly Applewhite) to help you prepare tax returns for your business in time and accurately.