Whether you're a real estate agent, an investment banker or someone running a small business from home, when it comes to taxes, there are a lot of misconceptions that could possibly cost you a fortune in the long run.
Call them myths, call them whatever you want, the important thing is to keep them mind so you'll know what NOT to do in order to avoid a nasty audit.
Here are the most common misbeliefs that swirl around the topic of tax services for businesses.
1. Filing a return is optional
Let's start with the most obvious myth about taxes: filing a tax return is voluntary.
That’s definitely not the case!
Come tax season, everyone must pay taxes, especially if you represent a business. Not doing so can have serious consequences in the long run, especially because the IRS is not a fan of anyone trying to trick the system.
2. If a mistake is made on your return, the accountant is the one responsible
A common misconception that many business owners believe is that, if a mistake is made on your return, the accountant is the one who is to blame. In reality though, that's not the case.
Making a mistake is human and some accountants may get things wrong on occasion. However, even if you do hire a financial expert to file your return, that doesn't mean you're shifting the responsibility entirely to your tax preparer. If the IRS finds a mistake and calls you in for an audit, it's on you.
Luckily, when it comes to tax services for businesses, there are 2 things you can do to avoid a disaster. First, make sure you hire the best licensed accountants. Second, always double check their work by simply going over you files to make sure everything is covered and the information is correct.
3. You don't need to pay taxes if you're a student and have your own business
Students who earn a very low income may not be required to pay taxes. However, if you earn a decent income, whether you have a job or have opened up your own business, you should start filing your returns, even if you're a full time student.
4. Working from home means you can deduct everything
It's not uncommon to open up a business and declare your home address as the main office. If you typically work from home, you can definitely deduct some of your expenses.
But does this mean you can really start to deduct everything? The answer is no, that’s just another common misconception.
Although you can definitely open a home based business, you can't add your utility bills, for instance, to your list of deductions. Or anything else that's not allowed to write off, for that matter. In order to start deducting things from your home office, there's a series of requirements you need to meet so consult with your accountant to find out what they are and avoid getting into trouble in the long run.
Bottom line is, if you're a business owner, an accountant is one of the most important professionals you need to hire for your company. However, you should keep in mind that hiring the wrong one can have consequences in the long run, especially if you believe certain myths and misconceptions when it comes to filing your taxes.