Not Keeping Good Records
In the first half of 2019 alone, researchers believe that data breaches exposed over 4 billion records. This should serve as a reminder that you need to keep good records of your business transactions. Not only is it important for tax purposes but it’s also important for the security of your business.
Make sure you have a system in place to keep track of all your business transactions. This could include a simple spreadsheet or a more advanced accounting software program. It’s also important to keep all your receipts and invoices in case you need to prove a business expense to the IRS.
Not Going Digital
Going digital, such as using a cloud repository, can support a 100% paperless process. It’s also increasing in popularity as a growing number of businesses are going completely remote and totally online. In fact, the digital marketing industry is expected to reach $807 billion by 2026, and up to 72% of online marketers describe content creation as their most effective SEO tactic.
Going digital is especially important for entrepreneurs as it can save a lot of time and money. You can easily access all your records from anywhere, and you don’t have to worry about losing important documents. By going digital, you can also automate many of the tasks associated with accounting and taxes. For example, you can set up automatic reminders to pay bills and file taxes. This can save you a lot of time and help you avoid costly mistakes.
Not Taking Advantage of Tax Deductions
One of the biggest mistakes entrepreneurs make is not taking advantage of tax deductions. There are many deductions that entrepreneurs can claim, such as the cost of office equipment, the cost of internet and phone service, and even the cost of traveling to meet with clients. These deductions can add up quickly and can save you a lot of money on your taxes.
However, you need to make sure that you are claiming the right deductions and that you have the proper documentation to prove them. For example, if you’re claiming a deduction for office equipment, you need to have a receipt or invoice that shows the date of purchase and the cost.
Not Hiring a Tax Professional
Another mistake entrepreneurs make is not hiring a tax professional. While it may seem like a good idea to save money by doing your own taxes, it can actually end up costing you more in the long run. A tax professional can help you navigate the complex tax laws and ensure that you’re taking advantage of all the deductions and credits available to you.
Additionally, if you’re audited by the IRS, you’ll be glad you have a professional on your side. They can help you prepare for the audit and ensure that you’re fully compliant with all the rules and regulations.
Being an entrepreneur is a lot of work, but it can also be very rewarding. However, you need to be careful not to make any costly mistakes when it comes to taxes. By keeping good records, going digital, and understanding SEO, you can help ensure that your business is successful.
