Mistakes You Must Avoid When Preparing Taxes in Palm Beach Gardens, FL

Posted On April 24, 2023

As a small business owner, one of the challenges you face is to prepare the taxes of your company. Taxes are complicated, and even a simple mistake can be costly. Pitfalls are everywhere, and your lack of knowledge of tax laws and experience preparing taxes can lead to unexpected losses. Because of this, it is best to hire tax prep and tax filing services in Palm Beach Gardens, FL, to guarantee complete financial accuracy. But if you want to learn about tax preparation, below are mistakes you must avoid:

Not Deducting Start-Up Costs Correctly

If you just started a business, the first year of preparing your business taxes can be full of mistakes. You may overestimate the deductibles from the start-up costs. Keep in mind that you can’t deduct all expenses of your startup right off the bat. You need to make a sale first. You may be able to deduct up to $10,000 from your startup costs in the first year as long as the total expenses are not more than $50,000. Sometimes, a skilled CPA will recommend waiting on the deduction until the second or third year of running your business. 

Picking the Wrong Entity

A lot of small businesses form an LLC or C-Corp; however, this can be a mistake. A tax expert can help determine a business tax entity that fits your company according to your desired business structure, financial goals, and the number of employees. The wrong tax entity can severely affect the future of your company. 

Not Separating Business from Personal Expenditures

Mixing your personal and business expenditures can be a red flag to the IRS. Ensure you deduct only business expenses. For instance, business entertainment and dinners may not be deductible. Also, you can deduct car expenses for travel related to business, car property taxes, car loan interests, and tolls. A CPA can differentiate personal and business expenditures, ensuring you do not make costly mistakes. 

Not Filing or Paying on Time

As you try to handle many aspects of your business, you can lose track of time and fail to file your taxes on time.  A tax expert can help you avoid this mess and ensure you stay on top of your taxes. Keep in mind that not filing and paying your taxes means two penalties. So, ensure you at least file your taxes if you cannot still pay right away. You can always submit a form to request an extension.