bness woman worried about taxes


Improper Record Keeping

Failing to keep accurate and detailed financial records can lead to discrepancies in tax filings. Inadequate documentation of income, expenses, and deductions can trigger audits and result in penalties for underreporting income or claiming invalid deductions.

money - bills and coins

Misclassifying Workers

Incorrectly classifying employees as independent contractors to avoid payroll taxes can lead to significant penalties. The IRS has strict guidelines for determining whether a worker is an employee or a contractor, and misclassification can result in back taxes and fines.

bills and coins

Failing to Pay Estimated Taxes:

 Small business owners often need to make quarterly estimated tax payments. Failing to do so, or underestimating the amount, can lead to underpayment penalties and interest charges. It's crucial to accurately calculate and pay these taxes on time to avoid issues with the IRS.

These common pitfalls can be avoided by maintaining thorough records, correctly classifying workers, and making timely estimated tax payments.

  • I am so curious, if you’re willing to write more on this in the future…

    What resources are there for figuring out how to classify workers?

    And when it comes to paying estimated taxes, where are they lenient vs. strict? For example, if a small business is not making much income, and their tax levels would be under a certain amount?

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