Common Tax Mistakes and how to Avoid Them

 Common Tax Mistakes and how to Avoid Them

As a business owner, it’s likely you’re very busy, having to focus on a wide range of aspects of your overall enterprise. You’ll be conducting meetings, overseeing staff, perhaps you’re involved in exciting new concepts, or you’re constantly on the go, travelling overseas. It is the variety and fast pace of business that can make life incredibly exciting for an entrepreneur, but when you’re so busy, it can be easy to be neglectful, particularly of the more dull areas of business such as your taxes. But tax is money, and any savvy business owner needs to keep a close eye on the cash. Here are some tax mistakes that are often made by business owners, that you can avoid…

 

Not putting money aside for taxes 

 

A tax bill is going to be inevitable for any business, but it’s amazing how many small businesses simply neglect to put aside cash for this purpose. Paying taxes should be a priority, and while it may be tempting to look at that comfortable bank balance and think how nice it would be to renovate the office, buy new equipment or give everyone a bonus, it is far wiser to put that money away for that pending tax bill. Having a separate account for taxes can help some businesses, out of sight, out of mind as it were! 

 

Not having a plan in place from the start 

 

As part of you business plan, it’s a very good idea to incorporate a tax plan into your future outlook.   Taxes are quantifiable, so of course you can plan for them. With a plan in place for tax, other plans become more realistic and you can more easily project into the future and assess your next moves. Not having a plan leaves you in the dark with regards to your future finances and in a worst case scenario, it can leave you with a large bill and not the funds to pay it with. 

 

Bad record keeping 

 

A full paper trail for tax purposes is vital. Keep good records and you’ll always be able to back up your claims with the tax department. If your business should be audited for tax purposes, and this can be a random check, not simply something that happens if your business is under suspicion of anything, you need to be able to account for everything. This applies to expenses, so don’t forget to keep all those receipts. 

 

A lack of knowledge of tax allowances and benefits 

 

Many businesses avail themselves of our tax advisory services and find themselves aghast at how much money they could have saved had they come to us sooner. We have intimate knowledge of all the tax benefits available to every business and we can help you make the very most of your taxes, often reducing your bills. There are so many schemes out there to help business keep their tax bills to a minimum, you just need that knowledge to know what they are so you can take advantage of them. 

Paul Petersen