Owning a small business comes with many unique challenges, including managing the financials of your business. You may also be required to submit tax returns or other financial reports to the government relating to your business. While you might think that you can handle reporting those things to the government, the reality is that accounting and meeting government requirements can be very complex.
This example is just one of the ways that your financials and the government interact throughout the year. Without the right experience and knowledge, you might find yourself struggling to meet the demands and regulations that the government has laid out. That can end up costing your business in terms of fines and penalties, as well as the original amounts due. Here are 5 reasons why you need to an accountant when dealing with the government.
Lack of Experience Can Mean Costly Mistakes
When you are starting a business, you are likely looking for any means possible to reduce your operating costs. While it might seem like a good idea to do your books yourself and file your own taxes, the truth is that if you do not have a solid accounting background and business finances, then you might be putting yourself in the position to make costly mistakes. Managing your accounting system incorrectly could find you compounding one mistake overtime.
Those mistakes could grow even greater if you do not close out your books properly from year to year. Working with an accountant business consulting firm can help you to avoid these mistakes, while explaining to you what is in your financial statements and how they should be properly set up.
Your accountant can assist in determining what your potential tax obligation will be and then assist you in determining what deductions may apply to your business, thus potentially reducing your tax burden.
Reduce the Chance of an Audit
While the chances that you are going to be audited are small, working with an accountant business consulting firm can help you avoid making the errors that could potentially trigger an audit. That means they will help you to understand your qualifying deductions and then report them properly.
For instance, you might want to deduct a business loss, but are unsure how to do so. If it is not done correctly, then you could end up with an audit. Working with your accountant, you can make sure everything is reported in a timely basis and on the proper forms.
The Tax Law Continues to Change
Every year, tax laws continue to change, along with the regulations that go with them. Your accountant is more likely to be familiar with them than you are, so working with one will help you from making a mistake because you don’t know the latest regulations.
The recent changes to the tax law and code that were passed in 2017 have made significant changes to the tax law. That means common business deductions have changed, and so what you might have seen as a legitimate deduction may no longer apply.
Those who are CPAs will also be attached to groups and journals that keep them informed of these changes and their impact. Continuing education is also part of an accountant’s professional life, which means they are more up to date than the traditional business owner.
Avoid Errors in Your Independent Contractor Taxes
Many individuals might be employed and have their taxes routinely taken out of their paycheck. On the other hand, your business may benefit from using independent contractors during your busy seasons, as they cost less in terms of taxes and training. However, if you do not classify them correctly, then you run the risk of paying penalties for not paying in enough taxes to cover your employer taxes. An accountant is key to managing this process and helping you to avoid making a mistake in your classifications.
Handling An IRS Audit of Your Business
Of course, there is always the chance that you might still have to go through an audit. Working with an accountant can be key to help you navigate this process effectively. After all, if an error or mistake was made, your accountant business consulting firm will be able to help you understand the error and how much you may have to pay in penalties or fines.
In fact, you might be able to amend your tax return to address the mistake and then pay the difference of your tax bill that still might be owed to the government. Recognize that there are time limits for you to amend the tax return and receive any tax refund that might be owed to you.
There are a variety of ways that your accountant can assist your business when it comes to dealing with the government. If you would like to know more about how our experienced and knowledgeable staff can assist your business, then contact us today.
Parker Business Consulting & Accounting, P.C. is a unique firm with more than a combined 75 years of experience in private industry, coupled with a strong background in public accounting. This combination enables us to provide valuable assistance based on direct experience with many of the same issues faced by our clients.