Starting a business isn’t simple. Some people will try to simplify the issue – and maybe even save a little money – by skimping out on some of their tax-based business responsibilities. This is a grave error! The mistakes that can emerge from this could end up doing a lot of damage to your business.
Not having an accountant
If you’re running a business, then you’re not going to have the time to deal with all of the financial complexities by yourself. And if you think you’re going to have time to do this effectively at even a moderately successful business, then you’re living in a fantasy world! Of course, very small startups can certainly deal with being run by someone who is both business owner and accountant, especially if that person really understands accounting at an academic level. This is why so many entrepreneurs become graduates in this field at places such as Maryville University. But, for the most part, you and your business are going to be much better off if you actually find an accounting graduate who can then dedicate all their time to ensuring there are no finance and tax errors.
Tax return errors
So what kind of errors are common when it comes to tax? Let’s look specifically at tax returns; errors in this area are the most common cause of the IRS coming in and having a look around for financial misbehavior. The most frequently made mistakes tend to be fairly harmless and don’t result in too much trouble – making errors in the Social Security number, for example. Misspelt names and mathematical errors are also common, but won’t land you in too much hot water. However, if these things happen persistently, then the IRS will have a strong case against your business if they want to convince a court that you’re purposefully misleading them.
Non-declaration of income
A lot of businesses have several sources of income. Even a commodity that you think results in ‘one income’ can actually result in several revenue streams via differing payment methods. The IRS want their share of whatever money you’re making – and a lot of business owners don’t like that very much. Don’t be tempted to hide any source of income from the IRS, because they tend to have a knack for finding these kinds of things out. The IRS are powerful, and have people working round the clock, using some of the world’s most advanced computers, to track down people who are making money that isn’t partially going into their pocket. Be careful not to make any mistakes, and certainly don’t hide your income on purpose.
Going under the table
Need to make payments to individuals or to another business? Then the IRS want their share of that transaction, too. Some businesses will attempt to make payments “under the table” by making payments in cash so that the IRS have a hard time tracking them. They then neglect to declare the transaction to the IRS when the time comes. If the IRS find out, you could get busted for a form of tax fraud – and that could spell the end for your business.