Why Entrepreneurs Struggle with Taxes (and How to Fix It)
Entrepreneurs are commonly known as high-risk, high-reward individuals. They’re the people who seek to make an impact in their communities, whether it be through starting their own business or achieving something that’s never been done before. However, just because these people have a knack for risk doesn’t mean they should avoid paying their fair share of taxes. If you’re an entrepreneur whose profits have been subject to criminal investigations following misfortunate and unintentional tax mishaps, you want to focus on two things. Firstly, get a federal criminal defense attorney by your side to help you escape a tax evasion claim. Secondly, this guide will help you learn more about why this happens and what you can do about it.
They Try to Do It Themselves
Entrepreneurs are often so caught up in their businesses that they don’t realize the need for expert tax help. They try to do it themselves and make mistakes, which can lead to fines and interest penalties, not to mention a lot of frustration. But even if you know what you’re doing when it comes to taxes, you may not be able to get all the necessary information from your accountant or bookkeeper on your own. You’ll need someone who specializes in working with small business owners and entrepreneurs’ taxes–a tax lawyer or CPA–to create a plan for your taxes. There are bookkeeping services brampton that are available if you happen to live in the Brampton area. The good news is that there’s plenty of qualified help out there and you can find that help online when doing your research.
They Don’t Use the Right Tools
What difference does the right tool make? When it comes to your taxes, the answer is EVERYTHING.
The first issue that entrepreneurs may face is trying to find the right tool for their business type. Indeed, calculating and complying with taxes, and especially sales taxes, can be challenging. Transactional taxes can vary greatly depending on your goods and the region you are targeting. So, if you’re not using a software solution designed for your needs, you may file an incorrect tax return.
Another point when it comes to tools is that not every tax-calculating tool can handle all assets. Cryptocurrency, for instance, is a digital asset that doesn’t behave like any other income form. So filing a tax return for crypto income is not the same as fiat income. Here too, you want to go above and beyond to ensure you are using the solutions the most appropriate to your needs.
They Don’t Check the Qualifications of Their Employees
The qualifications for an accountant vary from country to country. For example, in the United States, accountants need a bachelor’s degree and must pass a two-part exam. In Canada, they need an undergraduate degree and three years of experience. When you’re hiring employees or contractors for your business, ask about their experience and accreditations to make sure they’re qualified for the task at hand.
They Misunderstand the Regulations
Some entrepreneurs misunderstand tax regulations that apply to their businesses. This can lead them to break the law, spend a lot of time and money on penalties, or even go bankrupt. Ideally, even if you wish to run your tax return via a professional tool, you should always reach out to a professional accountant to create the first tax return for you. This can be a template for future returns and avoid violating tax regulations.
Tax mistakes are frequent for new businesses and entrepreneurs. They can lead to issues with the IRA and even federal pursuits if the government suspects entrepreneurs of tax evasion. In short, a DIY approach to tax returns can be expensive if you are not familiar with the American tax system.