If there’s one thing that’s absolutely true about people, it’s that nobody is perfect. We all make mistakes, and at times these mistakes can be very costly. Being an entrepreneur is no exception; you will make mistakes from time to time, and these can end up costing you a lot more than the average person. Similar to the average person, you pay taxes. Also similar to the average person, you can make mistakes on your taxes. However, this will end up costing you more in the long run! Financial management is a key component in being a successful entrepreneur, and taxes are a big part of that. There are some mistakes that small business owners make in this regard, and I’ll list three of those below. Staying on top of these things will definitely help your business get far and stay well above water, since things today aren’t easy at all!
1. You don’t keep your receipts!
Poor record keeping is a HUGE tax mistake! Everything you purchase for your business is a tax write off! However, if you don’t keep those receipts on hand, it’ll look really suspicious. If you report a certain amount, without a paper trail to back it up, the IRS will quickly give you the side eye treatment. Before you know it, an audit will come knocking, and those tend to get messy. We’ve all heard “Show me the money!” in this case it will be “Show me the receipts!” Always keep them handy!
2. You don’t keep track of your mileage or vehicle expenses!
This is definitely one that a lot of people don’t know about! If you use your vehicle for anything business related, that mileage is a tax write off! If you’re in real estate, you drive from property to property. If you drive for Uber using your own vehicle, that mileage is also a tax write off! In addition to mileage, just about any expense related to your vehicle driven for business can be written off. Gas and car repairs are the first that come to mind, but it’s not just limited to these two ! Parking and tolls can also be written off as well. Many entrepreneurs fail to keep track of those records, and that can end up costing you a lot more than you think. You use your vehicle for a lot of things business related, why shouldn’t you get back some of what you put into it? Those numbers will definitely add up over time, and be worth thousands of dollars at the end of the year. There are plenty of apps that can actually help you keep track of mileage, Mile IQ is a recommended app to track vehicle mileage & expenses. If you choose to use an app or software to track expenses, remember; refer back to tip #1 keep those receipts!
3. You’re not keeping track of the tax laws!
There are many things that can be written off as a tax write up for a business. No pun intended relating to the above tip, but your mileage may vary! While you can write off a lot of things, it’s up to you as a business owner to keep up with the tax laws to see the different rates at which these tax write offs apply. Let’s use mileage as an example. Last year, it was 57 cents per mile that could be written off. This year, it’s 54 cents. While it’s not a big difference at first, being that these miles can add up, your calculations will be way off the mark. When numbers get off track, here comes the IRS with the side eye! Always make sure that you’re up to date with your tax laws. Those few cents here and there will mean a lot of headaches later on if you’re not staying on top of it!
There are many different aspects to running a business, and each aspect is important. However, your business is you. You brought that idea into reality! You should get something back for all the hard work you’ve put into it. With the above tips, you’ll be ensuring that you get the most back for all that you’ve put in. I also love giving back & giving information to those starting out as an entrepreneur. Don’t make these tax mistakes!! You can always visit my website for more information about anything small business related; feel free to subscribe to the blog, or follow me on social media as @MissRMBA Hope to see you there!
As an added bonus, download the MileIQ app on Android or IOS, if you choose to upgrade to a yearly subscription, save 20% with the promo code MISSRMBA20. (See, this is why you always read to the end )
Angel Radcliffe @MissRMBA