As a small business owner, tax season can be one of the most challenging and frustrating times of the year. Since you're probably not an expert on the tax code, it can be stressful to file your taxes properly and take all the deductions available to you.
With the April 15 tax-filing deadline quickly approaching, Business News Daily spoke with several tax and small business experts about some of the biggest mistakes made when filing taxes, what deductions shouldn't be overlooked and how small business owners can start preparing now for next year's tax-filing period.
We talked with Barbara Anderson, director of product marketing for the online invoicing, accounting and billing software provider FreshBooks; Helena Swyter, a practicing accountant for creative professionals at Sweeter CPA; and Kristel Yoneda, a Los Angeles-based freelance writer and marketing consultant.
BND: What are the biggest tax mistakes small business owners make?:
Anderson: Being a small business owner is tough. There are so many demands on your time and so many hats you are required to wear. Oftentimes, the administrative or accounting work gets put on hold or delayed so that you can focus on your customers or business. One such thing that gets shuffled to the side is keeping track of receipts or expenses.
They'll be left on your desk, in your car or maybe even in a shoebox. At tax time, this becomes an issue, because you're missing expenses (and, therefore, cannot claim them as deductions), or you have to sit down and do them all at once, which takes lots of time away from your business. Business owners are better off automatically inputting and categorizing expenses into a single repository as soon as they can. This best reduces the risk of missing a deduction.
Swyter: Most of the problems and frustration I see on the part of the small business owner is when he or she has been commingling business and personal funds throughout the year and now has to dig back through bank accounts to straighten things out. It's important for entrepreneurs to establish a business bank account and to use that account strictly for business transactions. Get in the habit of paying for personal expenses with personal debit or credit cards, to avoid extra work at tax time.
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