Do you know what is the biggest and most common hurdle almost all business owners in Culver City face while running the business? Apart from administrative and operational issues, the one thing that poses a hurdle is staying on top of the various obligations to local, state, and federal tax agencies. Tax codes appear to be in a continual state of flux, the IRS and their Internal Revenue Code is the most incomprehensible thing to most individuals.
As the old legal saying goes, “ignorance of the law is no excuse”, which is mostly applied in tax-related settings, and it is quite safe to presume that when a tax auditor would present an evaluation of penalties, additional taxes, and other due interests, then he is definitely not going to take a kind consideration if your answer is “I was not aware that I needed to do that”. Another flip side of the tax ignorance is overpaying the taxes, without having the proper knowledge to avail the deductions that are legally entitled to you, which helps to lower the tax bill. This is where the role of a tax accountant in Culver City becomes significant.
With each passing year, building strategy to keep more of the revenue earned and preparing taxes become a growing difficulty. However, you can save all the frustration, energy, time, money, and an auditor-on-the-door, by hiring an experienced and professional tax accountant Culver City.
These tax professionals have a very long time of involvement with handling and preparing tax documents. These people continuously upgrade their knowledge by religiously going to different seminars on taxes, read scores of diaries, magazines, and get monthly assess tips, in addition to other things, to accurately decipher the changing tax code. The CPAs also have to appear for examination at regular intervals, after going through rigorous study hours of stipulated time. So, when it comes down to planning and preparing taxes for small businesses or startups, then without the help of a professional accountant, there is generation of a lot of misinformation and folklore that ultimately result in costly errors. Some of the common business tax misperceptions in this regard are as follows:
Misconception#1 – All start-up costs are instantly deductible: The costs to get a business on the gear are the expenses incurred before you actually start the business operations. These costs include the organizational expense and vary according to the nature of the business. For instance, the expenses incurred due to surveys, travel, training, and advertising. In short, these types of costs are termed as capital expenditures. At the time of beginning the business, you can opt to amortize or deduct certain start-up costs.
Misconception#2 – As a part-time business owner, you are unable to set up pension under self-employed category: Once you start a company, whether it is on a full-time or a part-time basis, you can avail a salaried position with a 401K plan, and set up SEP-IRA to enjoy the deductions.
Misconception#3 – Overpaying the IRS would not invite any audit: If you overpay the IRS in one area and underpay in another, then be sure that you would get hit with penalties and interests. Overpaying or underpaying the IRS are definitely not good ideas.
In order to stay “audit-proof”, you need to ensure that all the things are in proper places. Only an experienced accountant in Culver City would be able to document the nonracial transactions and give you a tension-free sleep at night.