Common Tax Mistakes Businesses Should Avoid

Annual tax filing is a regular routine for every organisation. But, tax filing is quite a laborious and taxing task to complete, as it involves data collection, report preparation and most importantly timely submission. Some organisations would get carried away with their success and end up spending a lot on the brand across the industry and other market-related problems, and would not be well prepared for the tax filing. Before collecting the information and calculating the tax returns, let us see a few tax mistakes that every company should avoid.

Inaccurate Income Report 

Over-reporting or under-reporting; both the conditions would attract problem like audit and in the worst condition, the company would be charged with a fraud case. These over or under-reporting could be intentional or by oversight, as the company tends to maintain both invoices and business payments concurrently and would have missed recording the payment received. But, IRS (Internal Revenue Service) would compare the reported income and the payments received it that doesn't match it would call for an audit. This problem could be avoided by regularly maintaining the report throughout the year, and updating the financial reports and other tax documents without any delay.

Common Expense Report 

Some organisations, especially small businesses tend to ignore the importance of maintaining separate records for business expenses and personal expenses. But, IRS would not accept this. They would usually look for clear segregation between personal and business expense. Thus, to avoid IRS inspection the organisations should strictly maintain separate records for both the expenses along with receipts.

Neglecting Deductions

Generally, companies would not want to draw the attention of the IRS and invite an audit for one careless deduction. Likewise, missing out deduction could also cost a lot to companies in term of investigations. Hence, it is ideal for organisations to monitor the deductions. But, identifying the eligible deduction could be a tough tax, and right tax professionals could assist in this process.

Overall, to have less chaotic tax filing, organisations must monitor and record their payments and expenses regularly. Business taxes are all about accountability and accuracy, thus, maintaining a transparent report would save the business from attracting unnecessary problems.