A very stressful part of running a business you have experienced is taxes. Taxes are mandatory for everybody no matter what, especially for businesses. Tax compliance is a very common issue that businesses will run into. Sometimes it can be detrimental to your business if you aren’t following all tax laws. Not following all tax laws and codes can lead to fees and penalties, which hurts your business financially.
As a business owner you might struggle with following all tax laws. We want to inform you on different issues that businesses run into when dealing with tax laws. That way, you can be better prepared and watch out for them.
Danger of Underpaying Taxes
A lot of business have multiple ways of making transactions, like cash, check, or credit card. This can lead to the problem of missing or failing to record a transaction. Failing to record the transaction can cause the business to fail to report the transaction to the IRS, and the expenses for the business are not as accurate. This is a red flag to the IRS and this will cause problems like compliance costs and more than likely penalties.
When it comes to paying your employees, you must also withhold taxes from the paychecks. It’s the business’ duty to pay those taxes on behalf of their employees. This is not a simple task and failure to do this properly could alert the IRS and lead to an audit by the IRS. Additionally, it could mean your business is hit with fines and legal and financial issues.
A lot of businesses hire contractors. With independent contractors, businesses are not required to withhold taxes when they pay them. However, they still must report that expense to the IRS through a Form 1099. Dealing with the tax side of having independent contractors can be tricky, and it’s important that the IRS does not see them as permanent employees. If they do, they will expect tax withholdings to be paid and that is another expense for your business.
Filing on Time
Another issue many businesses run into is filing their taxes on time. There are a lot of different types of taxes you must file and different dates and times you must file those taxes. It’s important that your business is filing their taxes consistently and on time because if they don’t. Not paying on time can lead to more taxes and compliance costs.
Cash vs. Accrual
The IRS will allow your business to choose between cash or accrual accounting method if you meet certain criteria when reporting. With the cash method, you record the income as it comes and expenses as you pay them. The accrual method, you report both as the are, whether you received or spent any money, no matter what, they both have to be recorded. Where businesses struggle is when they choose a method, they must stick to that method no matter what, unless approved by the IRS.
As you can see, tax compliance has many issues and there are some more common issues that a business typically runs into. Have you ever considered hiring an accountant? An accountant can help your business with tax compliance, keep and record accurate records, pay the taxes on time and make sure your business is running smoothly.
Choosing Harvest Tax & Accounting
Here at Harvest Tax & Accounting, all of our accountants are professionally certified and have proven experience in tax compliance. That’s why we can offer the best of the best for your business. We offer the best, reliable accountants. Our team takes the stress off your back so you can get back to running your small business which is what’s most important.
Overall, investing in an accountant results in less anxiety and more success for business owners. Harvest Tax & Accounting understands the importance of providing accurate and professional tax services for your business. We work to eliminate the confusion so that you can focus on only the most important financial decisions you need to keep growing your business.
With more than 45 years of combined experience, the team at Harvest Tax & Accounting has seen it all. Our team takes the time to give you the information that is most relevant to your business right now and we explain taxes in a way that is easy to understand. To learn more about how your small business can benefit from our services, schedule your free consultation today.