Taxes and small businesses: many duties required

Payroll taxes are not the only taxes that businesses must concern themselves with. There are numerous other tax issues that affect businesses, from estimated tax payments to the need to keep good records in case of tax audits.

These are basic issues that affect businesses in Texas and across the nation. But the effect is generally greater on small businesses because they are often owned and operated by people who wear multiple hats. In other words, the job of tax compliance in a small business probably falls to someone who plays other roles in the businesses besides taking care of taxes.

Let’s start with estimated taxes. To be sure, this type of tax payment is not unique to businesses. After all, many individuals are self-employed and must make estimated tax payments quarterly.

But quarterly estimated tax payments do also apply to businesses. Businesses are expected to prepay based on an estimate of what they owe. And a tax penalty called the underpayment penalty can be imposed for failure to do so.

It is also important for businesses to make their payroll tax payments in a timely manner. If a business operator delays or forgets to make these payments by the due date, the tax penalties that can be assessed are significant.

A good record keeping system is very useful, of course, in keeping a business on track with its required tax payments. Nor is that the only benefit of keeping good records. If tax litigation does arise, or the IRS requests a tax audit, having receipts and other documentation readily at hand can help to resolve the matter much more quickly than otherwise.

Source: Huffington Post, “Common Mistakes Small Businesses Make on Tax Returns That May Lead to Missed Tax Benefits,” Mark Steber, June 27, 2013