The Internal Revenue Service's 2012 tax filing deadline is Tuesday, April 17. Tax Day is typically April 15, but it's a little later this year. This is because the 15th falls on a Sunday and Washington, D.C., observes Emancipation Day the following Monday to acknowledge the anniversary of President Abraham Lincoln freeing the district's slaves.
Don't let the extra two days trick you into resting on your laurels, though. If you have yet to file taxes for your small business, there's no time like the present.
Before you get started, however, take a second to make sure you don't hold any of the common small business tax misconceptions highlighted in a recent Tire Review article by New Jersey CPA Richard Lipton. After all, as Lipton notes, "a tax auditor presenting an assessment of additional taxes, penalties and interest will not look kindly on an 'I didn't know I was required to do that' claim."
Some entrepreneurs believe that tax overpayments in one area act as a safeguard against being hit with interest and penalties in another. In fact, the Internal Revenue Service will take the same action in the event of underpayment regardless of whether you've paid more than you need to in another area or not.
At this time of year, people who work in home offices often think they have reason to be especially nervous. This is because of a misconception that having a home office raises a red flag that makes your company more likely to be audited. Although this used to be the case, so many solopreneurs and micro business owners work out of their homes today that it's impossible to audit all tax returns that claim the home office deduction. That said, the source warns, a high deduction-to-income ratio may still pique the attention of the IRS and potentially lead to an audit.
Ultimately, having at least a basic understanding of the tax system can help mitigate misconceptions and improve the accuracy of your filings.
"A tax headache is only one mistake away, be it a missed payment or filing deadline, an improperly claimed deduction, or incomplete records," Lipton writes.
Initiatives like mobile banking can help you keep a finger on the pulse of your business banking records even when you're away from your computer. My Bank's Mobile Banking makes it easy for entrepreneurs to perform a wide range of tasks, including checking your company's balance and locating ATMs.