Misunderstanding the complex regulations and guidelines set forth by tax codes for small businesses lead to costly mishaps. With constant change set forth by federal, state, and local agencies as well as widespread misinformation, it is completely understandable that problems arise. This can lead to your small business overpaying in taxes or even incurring tax penalties. Here are a few tax myths that might lead you to rethink how you handle your business accounting in Missouri.
Overpaying the IRS makes you “Audit Proof”
The IRS doesn’t care if you pay the right amount of taxes or overpay your taxes. Overpaying your taxes has neither an impact on the outcome of an audit or whether your business will be picked for an audit. The IRS does care if you pay less than you owe and you can’t substantiate your deductions with good recordkeeping. Instead of wasting money overpaying on taxes, turn your attention to properly documenting your expenses and getting solid advice from a tax accountant in Missouri.
Home Office Deduction = Red Flag For An Audit
There may have been a time when the home office deduction did trigger an audit. But today, operating a business from home is very common, especially with ECommerce businesses. The deduction no longer creates an audit red flag when the IRS rules for the deduction are followed. Plus, they have made it even easier to claim a home office. They rolled out a newly simplified home office deduction in 2013. Note that in following the IRS rules, the office space must be used exclusively for business purposes. It must also be the principal place of business or a place where you regularly meet with customers or clients.
An Extension to File Taxes is an Extension on Paying Taxes
An extension to file your tax return is not an extension to pay your taxes. Even if you have requested an extension, you are still required to pay your taxes by April 15th. Penalties and interest begin accruing from the date your taxes are due.
Using an Accountant Means You Will Receive Tax Planning Advice
Having a good Accountant in Springfield Missouri is essential to the function and success of your business, but it’s not everything. Your accountant uses the information you provide and transfers this data to a tax return. In this situation, you likely only receive reactive tax planning advice after you have already filed the prior year’s tax return.
If you want to lower your personal taxes, increase your profits, and attain greater wealth, you’ll need the help of a Tax Planner. Tax planning in Missouri goes beyond simply preparing a return once a year. Tax planning utilizes principals found in the Internal Revenue Code.