Each year makes it more challenging to do your taxes in a way that keeps more of your hard-earned money in your pocket. Hiring a professional accountant to handle your tax preparations is the greatest way to save unnecessary stress, time, money, and possible auditing scrutiny.
In order to accurately comprehend the ever-evolving tax code, tax experts have years of expertise preparing taxes, regularly attend tax seminars, and read dozens of journals, periodicals, monthly tax tips, and more. Discuss your case with an experienced business tax planner in Lake Mary, FL.
The complexity of tax law leads to much folklore and disinformation, both of which contribute to expensive blunders regarding tax preparation for small businesses. Keeping that in mind, let’s examine several widespread misconceptions about taxes and small businesses.
One: You can write off all of your initial expenses right away
A company’s “start-up costs” are those incurred before business operations begin. The initial investment required to launch a new business consists of both the initial investment and the overhead necessary to get the business up and running. Expenses in this category include things like promotion, transportation, research, and education. Capital expenditures are a catch-all phrase for initial and ongoing costs associated with setting up a business.
Paying more than you owe to the Internal Revenue Service will make you “audit proof.”
Whether you underpay or overpay your taxes is of little concern to the Internal Revenue Service. It does matter if you try to pay less than you owe without providing documentation for your deductions. Underpayment in one area will still result in interest and fines from the IRS. Never make the mistake of overpaying the IRS, whether on purpose or by accident. To “Audit Proof” yourself, it is best to keep detailed records of all your financial transactions and seek competent guidance from a tax preparer.
Incorporating Allows for Greater Tax Deductions
For many small businesses, incorporating is an unnecessary expense and burden because self-employed individuals (sole proprietors and S Corps) are eligible for the same deductions as corporations. Companies just getting started may spend thousands of dollars on legal and accounting fees to form a corporation, only to decide they want to change their name or focus within a year or two. Furthermore, many first-year small business owners who choose to incorporate, wind up having to pay the minimum corporate tax rate despite having no profits to report.