So filing your taxes may not have left you real happy with the results of your tax return. You know you’ve paid a lot of money but you’re not certain that you’re doing everything correctly to ensure the best results.
You may have been trying to do your business taxes yourself or you’ve been doing your own bookkeeping and then found a tax professional to do the actual return, but you’re still dissatisfied with the amount of taxes that you’ve had to pay. Writing that big check to the IRS can be really unsettling especially when you’re not certain of exactly what you’re doing wrong.
Diane Gardner, a tax coach and expert offered a few tips to some of the most common mistakes that business owners make with their taxes.
1. Be sure to select the best entity for your business.
Having your business listed as a sole proprietors or just general partnerships instead of an LLC or an S Corp could be exposing your business to a lot of unnecessary liability that you may not otherwise have to be exposed to. It could also be costing your business a lot of money in the tax world.
Attorneys carry the potential to have quite a bit of liability. It’s best to establish your business as an entity that can shield and protect your personal assets from potential liability over and above what your insurance policies might cover. Sole proprietorships and general partnerships don’t offer any liability protection. An LLC or S corps might be a better route. C corps, could cause you to end up with a personal service corporation, and then there’s a much higher rate of tax that could be applied.
2. Check for Missing Expenses
You could also be missing expenses that could be applied as deductions on your tax return such as your automobile expenses, whether using standard mileage or actual. If you have a home office, where you handle all your billing and administrative items, but maybe your regular office is just where you see clients, you could potentially write off both offices? There are also medical expenses in the right circumstances and other items that should be checked out with your tax professional.
3. Hire your kids
A lot of us have used our kids in our offices over the years, whether they’re doing filing, shredding, making phone calls, checking on appointments, etc. That’s a great way to start writing off some money and paying your kids during summer months or putting money away towards your kid’s education.
All in all it is important to check with your tax professional to determine if they are taking every tax deduction that you’re legally allowed to take.
Make sure that your have a professional who is helping you project and plan for the future, not just looking at the past.
This is a transcript of a recorded live presentation. It is in spoken-word format. While we have cleaned up the transcript a bit for easier reading, it’s not in edited written-word format.