Debunking the Most Common Small Business Tax Myths That Exist Today
According to recent data from the Small Business Administration, 47.5% of American private-sector employees work for a small business. That’s nearly half of the American workforce and shows that small businesses remain the backbone of our economy.
Small businesses, like any other business, are subject to paying taxes. Damaging myths surround small business tax laws, and you need to know them.
Are you a small business owner who needs more familiarity with the various business ownership tax myths? Check out our guide to learn more.
Paying Too Much Makes You Audit Proof
People believe that overpaying the IRS is how you avoid an audit. Overpaying is a bad idea for several reasons. It cuts into your profit, and the IRS doesn’t care if you over or underpay.
The IRS will perform a business tax audit to determine if you’re paying the correct amount. While there isn’t a penalty for overpaying, it makes little economic sense to do so. You can still get an IRS audit despite your payments.
The best way to steer clear of an audit is to hire the best CPA from the best accounting firm. Wealthability is one such accounting firm.
Taxes Only Matter at the Deadlines
Tax day for American workers is April 15th. If you’re a small business owner, you owe quarterly taxes.
A smart business owner knows that waiting until the deadline to file these quarterly taxes can have severe consequences. If you don’t employ an accountant, you’ll likely rush through the filing process. This kind of rushing may result in mistakes that trigger audits.
A year-round money strategy so prevents a massive tax bill. An unexpected tax cost can sink profitability and cause unneeded financial stress.
A Home Office is Tax-Deductible
Home-based businesses are far more common than they were in previous decades. Modern technology allows people to start businesses and sell goods and services virtually in ways never thought possible.
If you make soap from goat’s milk or craft brass jewelry, you have a home office where you work. Deducting a home office is possible, but not if your office consists solely of a desk and a computer. According to IRS law, you must show you dedicate a specific portion of your domicile to your business.
Your Accountant is Liable for Tax Mistakes
You hire a tax accountant as a small business owner to help you with your workload. You don’t have the time to calculate your tax burden, and the law isn’t your specialty. You want an expert to do the work for you, and you pay good money for this work.
That said, your taxes remain your responsibility. If your accountant makes a mistake or fails to pay specific fees, you remain liable.
Small Business Tax Myths
Small business owners already have so much work to do. Your profit margins are so slim, and it takes effort to turn a profit. That’s why you shouldn’t fall victim to any of these tax myths. Doing so could damage or destroy everything you’ve built.
Do you need more small business news? Check out the rest of our page.
