Five Common Tax Problems That Can Bring Small Businesses Come to a Halt


Small businesses spend the highest percentage of their time preparing and submitting taxes. And yet they run into some tax problems that can be the bane of their businesses.

Why so?

Tax requirements are complex and change almost every year.

According to reputed tax accountants in Calgary, small businesses experience several tax problems due to the extra tax responsibilities that come with being your own boss. However, you can try avoiding the mistakes if you are aware of them first. So, here are the five most common small business tax problems that you should be aware of.

1.       Underpayment of taxes

Underpayment of taxes occurs when the business owner doesn’t pass the collected sales tax along to the state as supposed to. The tax authorities hold the business owner or anyone involved in the business operation responsible if the collected sales tax doesn’t get paid on time. Tax accountants in Calgary reported that small business owners often also underpay their personal income tax.

2.       Lack of accuracy in records

 Authorities may ask for records when it is time to file the taxes or during your audit. The government auditors will estimate your quarterly taxes if you don’t. Now it will be very challenging for you to defend their estimate if you don’t have proper documentation. And it isn’t a big deal either. You can consult with tax advisors and take care of these matters efficiently.

3.       Taking self-employment tax for granted

Self-employed individuals operate their businesses as a sole proprietorship. So, you are required to pay the personal income tax on your business earnings minus your business expenses, contributions to EI and contributions to the CPP or Canada Pension Plan. It isn’t always possible to keep track of what to pay. So you can get help from business tax account specialists and avoid taking self-employment taxes for granted.

4.       Too many deductions

The Internal Revenue Service allows a business to subtract an expense from its adjusted gross income while calculating taxable income. You should, however, be conscious not to overstate the deductions. You must stay aware of the rules revolving around the type of expense and the percentage of the expense that can be counted as deductible.

5.       Making decisions without a professional

Preparing business tax returns is no easy feat. And small businesses need to focus on the big picture rather than the monotonous and complex tax processes. Tax professionals help businesses comprehend every detail of existing current tax laws. The tax accountants in Calgary also help you identify legal ways in which the tax bills can be reduced.

Tax problems lead to severe penalties and other problems in small businesses. You can avoid the consequences by consulting with a professional beforehand. 
Location: 2635 37 Ave NE, Calgary, AB T1Y 5Z6, Canada

Comments

Post a Comment

Popular posts from this blog

Three Accounting Tips That Make Things Easier for Entrepreneurs

Image
Times have changed and so has the way accounting works. Technology has replaced quite a lot of manual involvement in accounting. Now complex calculations are done at the drop of a hat. Yet, there is one thing that is still common in accounting. That is mishandling of funds and running out of money are still the two common reasons for businesses to shut down.  Entrepreneurs focusing on new business set up in Calgary are often the ones who fall prey to the consequences of inaccurate accounting. Even minute errors in bookkeeping can add up over time and cause serious trouble. Entrepreneurs aren’t experts in accounting. Thus, errors are bound to happen.  You can easily avoid silly accounting errors by consulting with our team at DiamondCPA.ca. Now you needn’t have to worry about the budget when you seek our assistance since our exclusive Christmas offer is going on. We understand entrepreneurs may not always have enough funds to hire an accounting team initially. Thus, we have brought for
Read more

Exclusive Benefits Of Filing Income Tax Return On Time

Image
  Are you contemplating whether you should file your tax return or not? Or have you read somewhere that you can skip filing your income tax returns if your income is below the basic exemption limit?  Filing an ITR is significant and applies to everyone, be it a salaried individual, a partnership or even a HUF. As a responsible citizen, you need to file your tax returns every year. Before you decide not to file the ITR, read on to gain a profound knowledge of the filing income tax returns enlisted by the best tax accountants in Calgary . You will thank yourself later for it.  Let’s get started-  Easy Loan Approval  In the words of reputed tax advisors , filing the ITR will help individuals when they need to apply for any vehicle loan (2-wheeler or 4- wheeler), house loans, etc. Any major bank can ask for a copy of tax returns as proof of the income statement. This is a crucial document for loan approval.  For Claiming Tax Refunds There can be instances when tax has been deducted (TDS)
Read more