Now that tax season is over many people are feeling relieved. This is especially true for those that may have waited till the last moment to file. Some may have chosen to wait so long because they experienced one of many IRS problems. Navigating tax laws and accounting can be hard work. The problem is made worse when business owners attempt to handle all of the processes on their own, including accounting and bookkeeping. We have a list of a few of the most common IRS problems that small businesses face.
Insufficient Bookkeeping
According to the IRS, insufficient record and bookkeeping is one of the biggest issues that leads to IRS problems. The biggest problem can be a lack of adequate record of business purchases. This is made worse when business owners use their own personal credit cards to make these purchases. The IRS expects exact numbers, not rough estimations. When an audit does happen, the officials will want to see receipts or proof of purchases.
Late Payments
Late payments can be a common IRS problem for new business owners. The common misconception is that taxes are due by Tax Day when the tax return is filed. The truth of the matter is, businesses are expected to pay quarterly taxes four times a year. Failing to pay on the due dates can flag a business for an audit. This can also cause interest charges as well as penalties.
Underpaying Taxes
Whether inadvertently or intentionally, underpaying taxes can be considered tax fraud. When it comes to calculating and paying federal taxes, the standard is perfection. When a small business without adequate accounting help deals in cash and with a large number of transactions, mistakes can happen. Small business owners may end up understating revenue amounts and overstating expenses. Some issues can indeed come from trying to comply with constantly changing tax laws and codes. However, if these mistakes are found in an audit, it can lead to costly penalties.
Avoid IRS Problems With an Accountant
If you want to avoid complicated tax issues be sure to hire an accountant for your bookkeeping, accounting and tax filing functions. When it comes to these functions a level of accuracy and perfection is expected. When you are a successful business owner juggling many responsibilities the last thing you want is to ending up making tax mistakes.
If you want professional assistance be sure to contact us at Clifford, Ross, Raudenbush & Cooper, LLC. We take great pride in providing excellent service. If you are dealing with tax issues and need help untangling the mess, give us a call.