1. Not separating personal and business expenses:
It is almost impossible for your Certified Public Accountant to know which transactions are personal and which transactions are business if you intermingle the 2. If your CPA has to try to identify which expenses cannot be deducted by combing through all your transactions, then you could be hit with a significant tax preparation fee. Small businesses should always reconcile their books every month to ensure all of their transactions are accurately recorded. Make sure you’re not overspending and saving for taxes. Maximize your tax deductions with planning regarding purchase of equipment, retirement funding, stock sales and investment back into the business.
2. Not taking bookkeeping seriously enough:
No matter how much they hate it, many small business owners in South Tampa insist upon handling the books themselves. From categorizing different types of assets and liabilities correctly to performing a monthly check of your accounts, establishing a serious bookkeeping and accounting system for your business is the key to keeping it financially secure. How can you know if you are making money or not if you don’t have accurate financial records? Always know your assets and liabilities. The balance sheet is very important.
3. Failing to specify Employee’s vs Contractors:
The proliferation of independent contractors, consultants, and freelancers has made it difficult to determine who is on staff and who is not. This could result in incorrect tax returns when it comes to filing Florida unemployment tax and payroll taxes since there are different rules and regulations for employees and non-employees. You could pay unnecessary payroll taxes. Your legal liability is also different and your business needs to be protected properly. Always consult your local CPA or lawyer for clarification on employee classifications!
4. Not reporting sales and payroll tax accurately:
Not properly calculating and collecting sales tax really hurts the bottom line of a business. The business owner must pay the customers 7% sales tax liability if they do not properly account for it at the time of sale. Make sure your point of sale (POS) software is correctly adding and tracking sales tax on each sale. The point of sale system needs to distinguish taxable from exempt sales, charge tax accurately based on this distinction, and transmit this data accurately to the general ledger.
Make sure your Tampa business is in tip top financial shape for this upcoming tax season! It will keep your tax preparation bills low!