A Tale of Taxes: How Ignoring Them Will Cost You
Updated: Oct 11, 2022
The Top 3 Costly Mistakes New & Existing Entrepreneurs Make
October 1, 2022, was the start of the fourth and final business quarter of the year.
Every year, thousands of entrepreneurs make the mistake of not realizing how vitally important Q4 is for the financial health of their business. But, don't worry, I got you!
This blog post is brought to you by The Morning Meetup—the ONLY networking group that meets 8 AM - 9 AM each morning! Tap in & join us to discuss topics like this and more.
Ok, now let's get to this tax business.
1. Not having a business banking account.
This one is major. When you get paid from a client, or get dough from selling your amazing products or get money for any scope of your business, YOU MUST have those funds in a registered business account.
You may think like me when I first started, "Imma slide on over here and get a separate banking account for business finances and other activities."
Nah, boo, that's not going to cut it with the Internal Revenue Service (IRS). That secondary banking account is not in your company name.
So, when tax time comes, you'll be running from here to there hunting down receipts and doing things that could have been avoided if you have a secured business banking account.
It doesn't matter what bank you choose, you must it open the count in your company name and provide your EIN (Employer Identification Number) to prove it's a legal existing entity. Then you've got to provide a Certificate of Good Standing from whichever state your company is registered.
Tax Tip: When you set up your business bank account, each time you get to Q4, you can pull bank statements and ledgers to get you ready to file your taxes in Q1 of the next year.
Trust me, this makes life so much simpler.
2. Poor record keeping.
Y'all may laugh at me, but one of my first years of filing taxes for my business, I was hunting down business expense receipts from a brown paper grocery bag that I kept in a corner of my room. 😖
That's a true story!
So, when my tax strategist filed my taxes and told me I owed Uncle Sam some dough, all I could do was sigh and shake my head.
Do NOT be like me.
Keep your records in ORDER.
Know what business operation costs are eligible for tax deductions and keep track of those expenses and activities. I suggest you gone 'head and sign up for a WAVE small business money management account. It's free. There's literally no excuse for you not staying on top of this. I'm being hard on you because you deserve better. And, real talk, you can do better!
Power Play: Once you know what business deductions you can take advantage of then, scan the receipts with your cell phone and upload them to your WAVE app.
3. Not hiring a professional file the taxes for you.
Sigh. Ok, so this is another confession.
I typically always filed my personal taxes on my own before I began my business. It was easy! I would download my favorite tax prep software and then it was on.
I thought that I could do the same thing with your business taxes! Why not?
Then I started the process.
After about thirty minutes, I was like, nah... I think I'm going to need professional help with this.
I urge you to do the same thing. Until you get a better hang of what it entails to file taxes for your business, hire someone! It's their speciality.
Even when your knowledge grows and you learn more about filing your taxes and learning about deductions, I still encourage you to seek the guidance of a professional.
A tax professional will know everything you need to file successfully. You don't have to worry about potentially forgetting something because you don't know tax prep. Some early entrepreneurs mistakenly file their business under the improper designation or don't fill out the proper forms that you need.
Do You Have a Tax Expert?
- 0%Of course!
- 0%Nope, do I need one?
- 0%Not too sure.
Power Play: Hire a professional/expert to file your taxes! This helps you stick to the tax deadline and ensures you don't miss any applicable deductions. Also, find someone who has a speciality in your business/field.
Research and realize this, you can find the best fit for you.
So, these were preventative measures, but what happens if you haven't filled taxes in YEARS? Don't worry about it, next week, I'll have a Social Proof Blog EXCLUSIVE!
I'll upload my interview with MBA, IRS Enrolled Agent, Sandra Morno. She'll share with us what happens if you don't handle your business and don't file. We'll discuss penalties and more. You don't want to miss it.
Leave me a comment & let me know if you found value in this blog!