Last week the Roni Deutch Tax Center – Tax Help Blog posted a new article debunking a handful of common business tax myths. I have included a of the myths below, but be sure to check out the full text at RDTC.com.
1. My accountant is liable for any mistakes on my return
Although you may hire a professional to prepare your tax returns, you are still responsible for filing a correct return with the IRS. Even though an accountant or tax preparer may complete and file your return, they will not be held liable for any mistakes, you will be. To avoid any problems, you should at least have a basic understanding of business tax laws, and always review your return before you sign it.
2. Itemizing is only for the rich
Unfortunately, many taxpayers (both those that are self-employed and those who work for an employer) assume that only wealthy people should bother itemizing their deductions. The truth is that filing an itemized return can benefit all types of taxpayers, at many different income levels. Itemizing is especially helpful for self-employed taxpayers, as there are dozens of business-related deductions you can qualify for. If you are unsure about itemizing, then you can prepare one return itemized and one return using the standard deduction, and compare the results.
3. I know I saved because I prepared my own return
Although preparing your own return will save you from having to pay your accountant or tax professional, you might be putting yourself at risk. Tax laws are always changing, which can make it hard to keep up with new credits, deductions, and qualification rules. A tax professional spends their career studying tax law changes. Therefore, unless you are confident about your tax knowledge, you might want to consider seeking help from a professional.
4. Only big business needs to collect sales taxes
It is unfortunate that any business owners believe this myth. Studies show that a number of business owners have used this excuse in tax evasion cases. The exact amount of sales tax you will need to collect will depend on the state you live in, not on the size of the business you operate. If you unsure about your sales tax obligations, contact your local tax authority or a qualified tax professional.