Common Mistakes Small Businesses Make

November 21, 2021
Published by Gonzales Group CPA

There are a lot of common mistakes that small businesses can make, especially when it comes to taxes. Perhaps the biggest mistake is thinking you can manage it all on your own. Your best bet is to choose a CPA in San Antonio TX, such as Gonzales Group. Take a look at these most common mistakes and see if you’ve made any yourself. If so, that call to us will be a lot easier! Plus, we have 40 years of experience helping out a variety of clients, and our goal is always to put your financial interests first. So if you’ve been struggling with your taxes and feel like you’re making mistakes or missing out, check out this list and see if a CPA is probably in your best interests.

• Incorrectly deducting start-up costs. If you’re a new business, you really should consider a CPA. The extra cost is likely to be well worth it and you may come out better, as a result. You’ll certainly have fewer headaches and potential fines. Owners frequently overestimate how much of their startup costs are deductible. In fact, they’re often spread out over years. The exception is if your total expenses didn’t exceed $50,00. Then the IRS will allow up to $10,000 in deductions from startup costs in your first year. A CPA can help you figure out how and when to strategically include these deductions to get the most out of them.
• Mixing personal and business expenditures. It’s easy and confusing to deduct expenses that you think are business but the IRS views as personal. Especially when it comes to travel. While your home office is considered a business expenditure, an extra day tacked onto a business trip is not. Your commute isn’t necessarily counted as a business expenditure, though driving for business is counted, but only $0.54 per business mile. A CPA can help you determine what counts and what doesn’t.
• Staff classification confusion. This gets tricky, as you may hire independent contractors to save money on taxes, but if they are expected to work on site or work a certain number of hours, they are more likely to qualify as regular employees. Making this mistake can lead to serious tax penalties.
• Keeping poor records. Not everyone is good at keeping records, especially with all of the big and little things that need to be tracked, not to mention payroll. Keeping track of everything truly is a job in itself — which is why you should hire a CPA! All of those little receipts that you forget to enter or other similar items can lead to fines or cause you to miss out on deductions. Having someone experienced handle your financials ultimately puts you in a better financial position.
• Forgetting tax obligations or simply forgetting to file or pay. There are so many different obligations when it comes to a small business. It’s nothing like doing your own personal taxes. Property tax, payroll, local taxes, employee insurance and more all need to be considered and included. It’s easy to get so overwhelmed that you don’t send in your taxes in time or don’t have the money to pay. Be aware that the fines for not filing are worse than the fines for not paying.
• Missing out on deductions. While you have to be careful about how much you deduct — that business dinner is potentially only 50% deductible — there are other small items that you may not realize you can deduct. Petty cash, stamps, the costs of printing marketing materials: these are deductible, but people often forget about them and don’t make the most of these small items that can add up come tax time. This is where a CPA can help you get more money back that you probably really need.

Regardless of which CPA you choose, though we hope if you need a CPA in San Antonio TX, you’ll contact us,  it’s easy to see how much work goes into more than just running your actual business. All of the costs, deductions, insurance, business deals, and so much more are important elements that need to be understood clearly to get the most money back and avoid any fines or penalties. An experienced CPA like Gonzales Group that offers a range of services can help you avoid these mistakes and take some of the stress off of you when it comes to dealing with these issues. Instead, you can focus on growing your business, knowing you’re on solid footing.

Categorised in: Business Tips, Common Mistakes Small Businesses Make, Finance Info, Uncategorized

This post was written by Gonzales Group CPA