Four Common Accounting Mistakes People Make And How To Avoid Them
While the internet has information from A to Z, accounting and tax are topics that are both hard to understand and time-consuming. Tax calculations and accounting for even a small business with bare minimum transactions can be complex and necessitate special training and taxation expertise. A CPA or accountant is an individual or entity responsible for assisting your company in compiling financial statements, filing tax returns, identifying tax savings, and analyzing any tax issues that may arise.
However, lapses in accounting data and faults in financial reporting are serious offenses that can result in harsh penalties and long-lasting sanctions for unpaid back taxes. They are seen as an offense similar to tax-dodging.
To help you avoid some basic errors that could prove costly, W R Howell CPA has compiled a list of the most common mistakes people make in business accounting and taxation.
1. Missing deadlines
The most common mistake we see people make regarding federal tax is missing deadlines. Missing the deadline for setting up a tax-deferred retirement plan, not contributing to the plan by the deadline, or not filing the return by the deadline are needless mistakes that can cost substantial amounts in late penalties.
2. Not following up with their tax advisor before the March 15th filing deadline
Some people start a business create an LLC but don’t follow through with their tax advisor before the March 15th filing deadline. If it would have been advantageous to file as an S corp, but you miss the March deadline and do not file a proper extension, the opportunity to file as an S corp is gone for that year. This can cost you, the taxpayer, additional tax that you were not expecting. The solution is to consult a professional tax advisor periodically.
3. Not setting up a retirement plan
Another mistake we often encounter is new business owners missing the deadline for creating a retirement plan. A deferred retirement plan can save a business owner substantial amounts in taxes. Additionally, the longer you wait before accessing your savings, the higher your potential retirement income could be. Setting up a retirement plan is a great way to boost your savings and can help ensure a comfortable retirement.
4. Missing payroll tax filing dates
Payroll tax returns are due quarterly. A business that does its own payroll can often forget to submit the return. Penalties for late payroll tax returns can be stiff, and the IRS is not very lenient or forgiving. It is wise to either use a payroll provider or at least a tax professional to file the returns.
To avoid these mistakes, reach out to the best certified public accountant and business consultants in Altamonte Springs, Florida, at W R Howell, CPA. Our approach to accounting services is all about value, and we provide personal, professional tax, accounting that help businesses and individuals minimize their tax liability and maximize their potential. Our founder, Wesley R. Howell, has been a CPA since 1994 and provides services to a wide range of clients, including individuals and businesses in various industries.