Everyone knows that taxes and coming up, and unless they’re getting a federal refund, taxes are something most people don’t look forward to. Some people have already filed their taxes, while others will wait until the last minute to do so. For those who are self-employed, dealing with taxes is an even bigger issue, since taxes aren’t taken out when they get paid. As for businesses that do have taxes taken out when it comes to payment, that doesn’t mean it’s any easier for them.
For people who are new in the industry, and are starting their own business, there are plenty of careless mistakes one could make, especially when it comes to taxes. Whether you’re a new business or one with lots of experience, what are some common tax mistakes in the workplace, and what can do you do to avoid them? Overall, here are some important things to consider.
#1. Not Taking Self-Employment Into Consideration
As I mentioned before, taxes need to be handled quite differently when you’re self-employed. When you’re self-employed, taxes aren’t taken out of your paycheck, meaning that you have to pay back a large sum when filing your taxes. As an example, let’s say that you’re self-employed, and you make about twenty thousand dollars over the course of a year. You certainly wouldn’t get a tax refund, and would be required to pay a large sum of that money back. That’s one of the downsides when you’re self-employed. Not to mention that failure to pay these taxes could result in penalties from the IRS. Regardless of how much you make when self-employed, always make sure to report your income.
#2. Not Keeping a Record Of Your Expenses
When it comes to taxes, another mistake that many businesses tend to make, is not keeping a record of their expenses over the year. After all, when you file taxes, what you’re doing is essentially collecting and reporting all of your expense records. Sometimes, people accidentally underpay because they might have missed a document, and this will count against them when they file their taxes. Overall, keeping a record of your full business expenses is essential.
#3. Not Planning Ahead
In relation to the previous point, another tax mistake that businesses tend to make, is not planning ahead. Aside from keeping a record of your business expenses, you should also be estimating how much you’re going to have to pay by the end of the year. That way, by the time taxes come around, it’s not much of a surprise. For example, when it comes to those who are self-employed, they are required to make quarterly payments if they go beyond a certain threshold. In this case, plan ahead, estimate how much you’ll make per month, and much your quarterly payments will be.
#4. Not Filling Out The Proper Tax Forms
Lastly, another tax mistake that’s common among businesses, is not knowing what tax forms to fill out, as it’s different based on the type of employment. For example, if you’re self employed, you have to be sure you fill out a 1099 form. However, if you are not, then you’ll receive a W2 form, and have to apply that when you fill out your tax forms.
Overall, these are some common tax mistakes in the workplace, and why filling them out properly is important, Be sure to keep these tips in mind.
For more information about why you’re paying so much in taxes, as well as common tax mistakes that businesses tend to make, feel free to contact us today at MOD Ventures. We look forward to hearing from you, and assisting you in the best way possible.