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1
Avoiding the Top Tax
Mistakes that Small
Businesses Make
Evelyn Lee
Date
2
Agenda
• Recordkeeping
• Report all taxable income
• Keep business expenses separate
• Review return for accuracy
• Consider e-file options
• Don’t fall prey to tax scams
• Choose your tax preparer carefully
• Do your homework
3
Recordkeeping
• Maintain records needed to figure your
income.
• Keep records needed to figure your
deductions:
–Cancelled checks
–Receipts
–Other evidence
• Retain records as long as you may need
them
4
Report all Taxable Income
• Report all taxable income on your return
• Most income is taxable unless it is specifically
exempted by law.
• You can receive income in the form of
–Cash
–Check
–Credit Card
–Non-cash exchanges such as bartering
5
Business Income Video
6
Keep Business Expenses Separate
• Avoid claiming personal expenses as
Business expenses – always keep these
separate.
• Three top expenses reviewed by IRS
–Home Office Deduction
–Auto Expenses
–Travel and Entertainment Expenses
7
Review Return for Accuracy
• Double-checking each line
• Watch for common mistakes
–Incorrect/missing SSN(s)
–Incorrect tax
–Computation errors
–Withholding/tax payments on wrong line
• Mistakes can delay processing
8
Consider E-file Options
• Choose IRS e-file
• Direct deposit
• Electronic payment options
• Preparer should offer e-file
9
Don’t Fall Prey to Tax Scams
• Tax scams / “sounds too good to be true”
• Abusive tax schemes evade taxes
–False deductions
–Improper use of trusts
• “Dirty Dozen” news release
• Tax Scams/Consumer Alerts page on
IRS.gov
10
Carefully Choose your
Tax Return Preparer
• Be aware of return preparer fraud
• 60% of taxpayers seek professional help
–Most preparers are honest
–Some prey on unsuspecting taxpayers
• You are legally responsible for your return
11
Choosing a Tax Preparer “You Tube”
Video
12
Do your Homework
• IRS has helpful publications
• IRS Small Business & Self-Employed Center
• Small Business Tools & Resources
–Small Business Advantage
–E-News for Small Businesses
–Small Business Tax Workshops
–Online Learning and Education products
13
Resources
Here are some of our top recommendation
sources for you to review.
• Publication 583 – Recordkeeping
• Publication 525 – Taxable/Nontaxable Income
• Publication 587 – Business Use of Your Home
• 2013 Standard Mileage rates
• Tax Scams-How to Recognize and Avoid Them
• IRS releases the Dirty Dozen Tax Scams
• Tax booklets and other resources are available at
IRS.gov or by calling 800-TAX-FORM
(800-829-3676)
14
Small Business Taxes: A Virtual
Workshop
Lessons include information on:
• Federal taxes and your new business
• Schedule C and other small business taxes and tax
forms
• Retirement plans for yourself and your employees
• Federal taxes when hiring employees or contractors
• Managing payroll and withholding the correct amount
from employees
• and more….

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Avoiding Top Tax Mistakes Small Businesses Make

  • 1. 1 Avoiding the Top Tax Mistakes that Small Businesses Make Evelyn Lee Date
  • 2. 2 Agenda • Recordkeeping • Report all taxable income • Keep business expenses separate • Review return for accuracy • Consider e-file options • Don’t fall prey to tax scams • Choose your tax preparer carefully • Do your homework
  • 3. 3 Recordkeeping • Maintain records needed to figure your income. • Keep records needed to figure your deductions: –Cancelled checks –Receipts –Other evidence • Retain records as long as you may need them
  • 4. 4 Report all Taxable Income • Report all taxable income on your return • Most income is taxable unless it is specifically exempted by law. • You can receive income in the form of –Cash –Check –Credit Card –Non-cash exchanges such as bartering
  • 6. 6 Keep Business Expenses Separate • Avoid claiming personal expenses as Business expenses – always keep these separate. • Three top expenses reviewed by IRS –Home Office Deduction –Auto Expenses –Travel and Entertainment Expenses
  • 7. 7 Review Return for Accuracy • Double-checking each line • Watch for common mistakes –Incorrect/missing SSN(s) –Incorrect tax –Computation errors –Withholding/tax payments on wrong line • Mistakes can delay processing
  • 8. 8 Consider E-file Options • Choose IRS e-file • Direct deposit • Electronic payment options • Preparer should offer e-file
  • 9. 9 Don’t Fall Prey to Tax Scams • Tax scams / “sounds too good to be true” • Abusive tax schemes evade taxes –False deductions –Improper use of trusts • “Dirty Dozen” news release • Tax Scams/Consumer Alerts page on IRS.gov
  • 10. 10 Carefully Choose your Tax Return Preparer • Be aware of return preparer fraud • 60% of taxpayers seek professional help –Most preparers are honest –Some prey on unsuspecting taxpayers • You are legally responsible for your return
  • 11. 11 Choosing a Tax Preparer “You Tube” Video
  • 12. 12 Do your Homework • IRS has helpful publications • IRS Small Business & Self-Employed Center • Small Business Tools & Resources –Small Business Advantage –E-News for Small Businesses –Small Business Tax Workshops –Online Learning and Education products
  • 13. 13 Resources Here are some of our top recommendation sources for you to review. • Publication 583 – Recordkeeping • Publication 525 – Taxable/Nontaxable Income • Publication 587 – Business Use of Your Home • 2013 Standard Mileage rates • Tax Scams-How to Recognize and Avoid Them • IRS releases the Dirty Dozen Tax Scams • Tax booklets and other resources are available at IRS.gov or by calling 800-TAX-FORM (800-829-3676)
  • 14. 14 Small Business Taxes: A Virtual Workshop Lessons include information on: • Federal taxes and your new business • Schedule C and other small business taxes and tax forms • Retirement plans for yourself and your employees • Federal taxes when hiring employees or contractors • Managing payroll and withholding the correct amount from employees • and more….