TAX SEASON IS NEVER OVER FOR BUSINESS OWNERS

By Donald Williams Owner of Williams Accounting & Consulting

Over the past decade, entrepreneurship has been on a steep incline, which was further accelerated by the events of the COVID-19 pandemic. The U.S. Census Bureau reported that approximately 5.4 million businesses were created in 2021 alone, trumping the 4.4 million businesses that were created in 2020, which was the hardest year for businesses during the pandemic.

Unfortunately, the more new businesses are created, the more opportunities there are for these fledging business owners to make simple mistakes that could deal a hard blow to their new venture later on down the road. And one area where many new entrepreneurs seem stumped is their taxes.

Without guidance, it’s easy for new entrepreneurs to make the mistake of filing their business taxes the same way they file their personal income taxes in the past. Most taxpayers will rush to complete to file their taxes by the federal deadline of April 18.

However, for businesses, tax season doesn’t end on April 18. It’s an ongoing process that happens quarterly. With businesses, taxes are filed quarterly, and this year’s dates are on April 18, June 15, and September 15. January 17 of next year are the deadlines for businesses to file their taxes.

Normally, an individual who is an employee receives a W-2 form at the beginning of the year, which shows the earnings that their employer took out throughout the year, which is known as that person’s estimated taxes. In this case, the employer withholds the individual’s taxes and pays them to the Internal Revenue Service (IRS) for each individual based on an estimate. Anything over is given back in a tax return. However, businesses pay taxes quarterly and are responsible for calculating exactly what they owe the IRS.

Not following or being aware of IRS guidelines can hurt a business. It is very common for businesses to find themselves in tax debt due to what is called the estimated tax trap. Most of the time, these businesses are actually paying taxes, but not correctly. Without following guidelines, they are miscalculating what they owe, which can lead to a hefty surprise tax bill from the IRS later on down the road.

In 2020, the IRS reported that it was owed almost $400 billion in taxes, with the number one cause being owing more than expected on taxes. This is exactly why people need accountants, not just businesses but also individuals. We are here to help. The average person is not only unable to handle their own taxes, but there are a lot of guidelines, benefits, and changes that they are unaware of. This goes for business owners as well.

If you are an individual or business owner and don’t have an accountant, you are shooting yourself in the foot. It is unfortunate that many people allow themselves to go into tax debt because they won’t bother to hire an accountant. There are a lot of new business owners on the scene, and many of them will end up paying more in the long run because, eventually, they will be forced to hire an accountant to clean up the mess they have made for themselves.

With over 20 years of experience in accounting, Williams Accounting & Consulting provides financial advice and services to individuals and businesses from both business locations in Atlanta and New Orleans. For additional information, visit https://williamsacct.com.

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