With the July 15 tax deadline coming up quick, taxes are on our minds. Below are five common mistakes that small businesses – such as your volleyball club – could make when it comes to taxes.
Waiting until tax time to catch up on record keeping
Financial Statements should be updated monthly and reviewed at least quarterly for any errors, and those errors should be fixed immediately. The more frequently record keeping is performed, the easier filing should go.
Getting behind on tax deposits and estimated tax payments
Your business should be paying quarterly taxes. Maintaining the proper payment schedule and payment accuracy will help minimize any trigger for red flags and paying penalties.
Missing out on common small business tax deductions
If you work from home, you are eligible for a home office deduction. Be prepared to know the percentage of your home that you use for business, whether it is part of a room or a whole room.
Do not forget to save all your receipts when you travel. If you travel for work, you can deduct expenses for multiple items, including mileage on your car. Visit the IRS’ website for the full list.
Mixing business with pleasure
Pay attention to why you might be expensing an item. Are you purchasing uniforms for your club teams? Helping your kids’ club as a team parent? Make sure you identify the true reason for your purchase and keep your accounts separate. Also, avoid expensing items to your personal card and reimbursing yourself. The best way to avoid this is to give your business its own bank account with a business card and checks.
Choosing the wrong business structure
Choosing the wrong structure can affect the way you file taxes. Make sure you know the difference and find the best structure for your business. See the Small Business Administration’s website for more information on business structure.
If you avoid these missteps throughout the year, tax time should pass much more smoothly.