4 Major Tax Mistakes You’re Making Right Now
Although Clients ARM is not a company or professional CPAs, we are a small business. Like all small businesses, we must handle our business taxes each year. We are also accounts receivable management experts. So, we know a thing or two about how businesses can protect their bottom line. Here are 4 major tax mistakes you’re making right now.
You Don’t Understand the Proper Deductions for Your Business
There are deductions that you can make for your business. Having the right deductions will lower your tax burden. However, your deductions may depend on the type of business that you have. Deductions and their amounts can change each tax year. In order to know the amount you can deduct, it’s important to keep up with your expenses throughout the year. You may be able to deduct:
- Use of your vehicle for business purposes;
- Expenses incurred from going into business (up to $5,000 your first year);
- Books related to business;
- Professional fees;
- Legal fees related to your business;
- Bad debts for product based businesses;
- 50% of business entertaining expenses;
- Business travel;
- Interest for business financing;
- Purchase of new equipment;
- Moving expenses for the business;
- Software depreciation;
- Charitable contributions (in some instances);
- Professional education expenses;
- Advertising expenses;
- Business gifts;
- Office supplies;
That list isn’t all-inclusive. To learn about which expenses you can deduct for your business, talk with a qualified tax professional.
You Didn’t Save the Money to Pay Your Tax Bill
We all know that the tax man cometh every year. Another major tax mistake is not saving the money for your tax bill throughout the year (particularly if you don’t pay quarterly estimates). As a rule of thumb, you should set aside 25% of the money that you make for your taxes. Set it aside in a separate account so that the money will not be used for any other purpose other than paying your tax bill. If you don’t pay your tax bill in full, you could be penalized by the IRS and end up paying much, much more than you actually owe.
You’re Not Thinking about Your Future
Your current taxes can affect your growth next year. Speak with a tax professional about how your taxes could affect your business and the best method your business should follow for handling your accounting each year. This is particularly important if you plan to seek funding. Your taxes affect your profit and loss statement; and lenders will look at and consider your profit and loss statement.
You’re Not Hiring a Professional
If you’re doing your taxes on your own, stop. Hire a professional accountant. It may seem like an expense for your business that you can’t afford, it’s much better to have a professional handle your business taxes. They know the tax laws that and they know how to reduce your tax burden.
Get Ready for 2017!
Your business taxes needs your attention for 2017, but so do other areas of your business. If you’re ready to learn how you can grow your business in an economical fashion, contact Clients ARM. We are a U.S. based remote services company that helps businesses get more done. To find out how we can help your business, contact us today to schedule your process review. It’s free and there’s no obligation.