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Don't get too aggressive with your tax deductions

mansleeping8251415.jpgOne of the perks of becoming a small business owner is having the ability to have numerous tax deductions. While tax deductions will save you a lot of money, they can be potentially dangerous to your company if you are not using them correctly. A lot of small businesses will become too aggressive with tax deductions and this often sparks the IRS to come after you with a nasty fee and audit. The IRS will even shut down your business if they find that you lied and that you are claiming things that aren't tax deductions.

Having your tax bill significantly lowered is very attractive but is it really worth the headache you may cause yourself? The consequences you may face are not a laughing matter and they may cause you to wind up in prison if you aren't careful. Some small businesses will file an extension to postpone paying their taxes. An extension will buy you time but it's not going to get you out of paying your taxes.

Hire a good CPA to help you with your taxes. The job of a CPA is to help you find the deductions that are legitimate for you to claim, not to help you go overboard and place yourself into a high risk category. They will also help you find ways to pay for your taxes if you don't have enough money up front to pay for them.

Is it better to work with a CPA that is a sole-proprietor and does the taxes on the side or should you hire one of the big guns to do your taxes like Jackson-Hewitt or H and R Block? It's up to you but the plus side in working with the big companies is that they can often provide you with loans to help reduce the stress you may feel in trying to pay for your taxes on your own. This can be a big relief if you realize you owe a lot more than you thought.

The best way you can reduce your tax burden is by paying your quarterly taxes properly. The IRS has increased the number of audits on small businesses to help close the tax gap. Since it's small businesses that often fail to pay their taxes correctly, it is only safe to assume that you are always going to be at risk for an audit by the IRS. By doing your quarterly filings correctly, the IRS may not flag you for an audit like they will to the companies that just cannot seem to make their payments on time or for the correct amount.

Make your numbers match. A penny or two isn't a big cause for concern but when you start getting your taxes and books mismatched by $5 or more, you are going to run into trouble quickly. Keep your books tight and do your best to keep the numbers matching what you report to the IRS and to what you have in your records. If everything checks out okay, an audit will go by much faster than it will if you find yourself struggling to show the IRS documentation because your books are off by several thousand dollars.

Greed can absolutely destroy a business. Everyone has to pay taxes, they are inevitable. Why fight them? Instead take the time to ensure you are paying them correctly so you don't have to explain yourself to the IRS or so you aren't blaming your CPA for doing the filing wrong when they used the information you provided to them.

Visit the website to see which tax deductions you are eligible for and avoid taking ones that you aren't eligible for. Pay on time and keep documentation as you never know when the IRS will choose to come after your business.

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