Business tax preparation is one of the most important things that every business, big or small, needs to do. This is basically an umbrella term for tasks that involve bookkeeping and estimating the total tax amounts that a company needs to pay to the Florida government. This can include the tax amounts from a company’s yearly total income and even taxes from the payroll of every employee in each month. Most big companies either have their own team of accountants for this job or seek help from accounting firms.
However, small companies, especially those that have just started running, might have owners who think they can estimate taxes on their own. This leads to them recording transactions on their own and calculating taxes. However, most small business owners aren’t knowledgeable enough about small business tax preparation.
They might make the wrong estimates or not have enough knowledge about changing tax laws in Florida, if any. Hence, taking up the job of calculating taxes on their own is rather risky and can lead a small business owner to face problems from the IRS. So, let us show you some common mistakes that you might end up making if you’re also thinking of undertaking business tax preparation on your own. You must also know how a professional CPA can handle each mistake, which will motivate you to seek help from external professional accountants even more.
Common Mistakes By Company Owners In DIY Business Tax Preparation
1. Mixing Up Professional and Personal Transactions
Someone new to doing business might use only one account for all transactions. These can include both professional and personal ones. As a result, while recording all transactions, they might end up including all transactions, professional and personal, in the bookkeeping. As a result, they might calculate the wrong tax amounts, which might be larger, leading to more losses that could have been avoided.
2. Calculating The Wrong Amounts
This is the most common error that happens in DIY business tax preparation operations. You might be overwhelmed by so many transaction records that you might end up making the wrong calculations. Things can get worse if you forget to add some important transactions or simply don’t know the correct methods for tax calculation.
3. Wrong Calculations Due To Lack Of Knowledge About Tax Laws
Some business owners go to the extent of calculating taxes from yearly income and payroll purely upon guesswork. This happens due to a lack of knowledge about business tax preparation laws in Florida. Some laws dictate the tax deductions applicable for different business types or structures, while others might tell the amounts that businesses have to pay depending on their size and industry. Having no such knowledge and using only guesswork for tax preparation is dangerous and is a ticket to getting trouble from the IRS.
4. Not Knowing About Credits
Apart from tax amounts depending on business type, there’re also credits that Florida’s law offers to businesses regarding tax preparation. These can depend on factors such as using renewable energy or office type, and more. If you don’t know about these credits, then you’ll end up losing a lot of money in taxes that you could’ve saved.
How A Business Tax CPA Corrects Each Mistake
1. Helping You Learn To Calculate Taxes
First of all, small business tax services can help you learn how to calculate tax amounts in the first place. They can review the transactions you’ve recorded and point out calculation mistakes or missing information. Then they can show you how to resolve such mistakes and even help you calculate the right taxes by separating professional and personal ones. In fact, a small business tax advisor might ask you to separate professional and personal transactions by creating a separate bank account for your business only. This’ll prevent mix-ups and result in the calculation of the right tax amounts.
2. Making Tax Preparation Automated
A professional CPA won’t just stop at correcting calculations for you. They can also help you learn to use software like QuickBooks and more. Such efforts prevent miscalculations, silly mistakes, and constant manual auditing, which can be annoying at times. Making such activities automatic, alongside showing the right calculation methods, makes business tax preparation less error-prone.
3. Teaching You About New Or Changed Tax Laws
Professional CPA teams in Florida will always inform you about the tax laws that apply to your business, depending on its type. They might also tell you about changes in tax laws that may or may not happen in this state. All this helps you to avoid calculation mistakes due to a lack of knowledge about tax laws, which might get you into trouble otherwise. It also removes the chances of you using guesswork for calculating income and payroll taxes.
4. Knowing About Tax Credits
Lastly, professional CPAs can tell you about tax credits or relaxations that your company can enjoy. This might depend on your company structure, things used for operations, and more. However, a CPA can tell you about the credits to make your tax amounts smaller and help your business save more money. This is, of course, helpful for making your business profitable in the end.
Should I Seek Help From A Professional CPA Instead Of Doing Business Tax Preparation Myself?
Based on the facts above, it’s obvious that you should seek help from expert CPA services for business tax preparation. The facts above show that tax estimation and filing on your own can be very risky and cause errors. You might be too busy to know about tax law changes or calculation mistakes due to other business operations. Hence, asking a CPA agency to handle your taxes by communicating with them is a way to focus on business tasks without worrying about tax problems.
We at Advantage CPA offer this opportunity to you if you have started a new business anywhere in South Florida. At Advantage CPA, we know that you, as a business owner, might be too busy to research tax calculation and filing methods. You may also not fully understand many aspects of such tasks, even if you research them online. Our team of experienced CPAs offers you a significant helping hand in calculating the right taxes and implementing strategies that can save you money. Contact us now for more sustainable solutions regarding taxation in Florida.
