Avoiding Tax Pitfalls, Common Mistakes Business Owners Make

With tax day looming ahead, here are some of the common pitfalls where business owners make a misstep when it comes to filing, or not filing, their tax returns.

As a business owner, you are a master of your craft, building something out of skill, service, and hard work with every client and every project. But when it comes to taxes, even the most skilled professionals can find themselves tangled in a web of complex rules and regulations. This guide aims to equip you with the knowledge to avoid the most common pitfalls and maintain a seamless tax compliance strategy.

Worker Misclassification

Businesses sometimes misclassify workers as independent contractors, rather than employees, which can lead to a myriad of tax collection issues and up to one year in federal prison.

A business owner must examine the relationship between the worker and the business and should consider all evidence of the degree of control and independence in this relationship. It is recommended that business owners consult with a tax professional before designating a worker as an independent contractor.

Workers who believe they have been misclassified can file a Form SS-8 with the IRS, which is a formal request to the IRS to determine the worker's status for purposes of federal employment taxes and income tax withholding.

Staying on Track

So, whether you are a seasoned business owner or a freshly minted entrepreneur, remember that tax compliance is as essential as the quality of the work you deliver to your clients. Embrace these tips, seek professional guidance when needed, and you will be well on your way to a tax season that is as smooth and stress free as your best work.

Not sure where to start? Schedule a free consultation online at AzarvandTaxLaw.com or by emailing [email protected].

A version of this article was published in Salon Today .