We all make mistakes. Sometimes, it’s small like forgetting our cell phone behind or forgetting to mail in a bill promptly. However, not paying the Internal Revenue Service (IRS) can have larger consequences. Here are some of the most common mistakes made by South Florida businesses.
1. Failing to work with a CPA tax accountant throughout the year.
By working with a tax accountant throughout the year (rather than after the year is over), you will be able to proactively take advantage of the tax law incentives available to your business. That’s why most businesses work with an accountant on a monthly or quarterly basis.
Quite frankly, there is very little an accountant can do to save you money on taxes if wait until tax season.
2. Operate in the wrong business entity.
Often, small businesses in Miami will be set up improperly. As a result, they may be subjected to double taxation or may not be entitled to tax deductions which they ordinarily would be entitled to.
3. Misclassify employees as independent contractors.
Many small business owners try to treat workers as independent contractors to save payroll taxes. However, this can end up costing you more if the IRS disagrees with your assessment. And, it often encourages them to look deeper into your business practices to see what else might be faulty.
4. Forget to make estimated tax payments.
Most small businesses have to make estimated tax payments on a quarterly basis. Failing to make quarterly payments will trigger penalties from the IRS.
By all means, it is often confusing for small business owners to estimate their quarterly tax payments without the help of a CPA Firm but the IRS does expect to receive payment regularly.
5. Failing to file and pay taxes on time.
Many small business owners are obligated to file and pay taxes by March 15th, not April 15th. Forgetting to file imposes a 5% monthly charge for those that file late, and it increases to 25% later.
The reality is that our tax system is overcomplicated and constantly changing. To avoid overpaying tax and incurring penalties, most savvy small business owners employ a CPA Firm to help them minimize their tax obligations. To learn more about how we can help you, simply call us at 305-231-2150 and ask for Andy Brody.