Scared of the Common Taxation Errors in Business
It’s really a tough time when it comes to tax filing. A number of people make some common taxation errors while filling their return. But actually, it should not be that much scary.
“People always scare of the errors, and that’s where they get into trouble”.
In this article, I have tried to discuss some of the very common taxation errors which a number of people make. These errors should be avoided. I hope this will be very helpful to you.
Don’t get afraid of the Tax Agents
There are a couple of things which fears most of the taxpayers, which are really not a big issue.
The first one is auditing. Yes, it’s a little bit scary, but yes you do not need to worry much about it. If you are an honest taxpayer and keep accurate records of your earnings, you don’t need to take it seriously. You may receive an email or a letter from a govt. official asking for records. The only thing you have to do is to provide them with proper information. Don’t treat them like a nightmare, actually, they are not if you are honest. They are very cooperative as long as you cooperate with them and you are keeping good records.
The second one is that people feel cowardly about talking to a tax agent. But the fact is that he is the actual helper. You can solve your most of the tax problems by simply calling one agent and asking him for help.
Avoid late payments or disorganization
You need to be sure that you are regular and on-time in case of payment of taxes whenever they are due. Avoiding this will hit you with hard penalties. The govt. will also blacklist you as problematic taxpayers.
Another thing that has a great impact is organizing your bills properly through an accounting software system or folder system. This gives the tax agent a glossy feel. Still, if he audits your account and found one or two bills missing, he will surely understand the efforts you have put into managing your account properly. All the business face different cash flow periods, sometimes it’s flooding like amazons and sometimes dry as Sahara.
Do stay on top of how your business is performing
Keep knowledge about the numbers, be always up-to-date. This will help you estimate your profit at the end of the year. If you multiply your forecasted profit by 30%, you’ll have an almost accurate estimate of how much tax you’re going to pay. if you are a continuous late payer, you are actually throwing your money in waste as the penalties will become harsher. If you feel that you easily get confused whenever you think about taxes, you immediately need an accountant or a tax adviser for you. Do not avoid taxes as they won’t go away, they will stick to you even more.
Make Your year-end adjustments
After updating your income and expenses, it’s time to counter year-end adjustments. These adjustments are journaling entries done to your accounts at the end of a period so your financial statements accurately reflect your business performance.
In accounting, we break up the life of a business into segments so that we can more easily follow its progress. A period can be any duration, but most companies use a fiscal year. This is so you can close out the books at the end of that fiscal year, and properly preserve the connection between expenses and the revenue they generate.
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Taxation is not a nightmare to get afraid of. You must handle this process smartly.