Don't Be Fooled: Busting Common Tax Myths for Businesses

Is Your Business at Risk of Falling for Tax Myths?

With the spooky season upon us, it’s easy to get tricked by ghostly tales, but when it comes to taxes, getting "tricked" is no treat. The thought of missteps in your tax filings can haunt business owners all year round, not just on Halloween. Let's clear away the cobwebs and shine a light so you can keep your business ghoul-proof from these slippery tax myths.

Myth #1: File an Extension? More Time to Pay...

Don’t get spooked by thinking an extension allows extra time to settle your tax bill. While filing extensions do exist, they merely give you longer for paperwork — not for payment. The deadline for payments is still April 15, and a missed payment means you might face penalties and unwelcome interest.

Myth #2: Bank Statements Are Proof Positive

Can bank statements stand up to an audit? Not quite. They might show transactions, but the details about what was purchased and its business purpose can escape them. Detailed receipts are your best defense, particularly for finer expenses like travel, meals, and mixed-use business items.

Myth #3: Write-Off Wonderland

Imagining you can write off just about anything? Think again. The IRS is pretty clear-eyed about what counts as a business expense: it must be “ordinary” and “necessary.” So, trying to sneak in those vacation costs under business expenses could trigger the IRS’s alarm bells.

Myth #4: Small Fish Don't Get Audited

No need to don your invisibility cloak just yet. Regardless of size, any business can be picked for auditing. So, while you might think you’re too small to matter, remember that large deductions or peculiar transactions can increase audit chances. Practicing diligence with your records is always wise.

Myth #5: Independent Contractors Shorten My Tax To-Dos

Hiring independent contractors isn’t a payroll tax escape hatch. Whether a worker is classified depends on factors like control and work specifics. Misclassification might create a storm of fines and back tax dues, so classify cautiously and correctly.

It's Time to Unmask the Truth

Nobody wants tax skeletons lurking in their closet, and we understand your intentions to steer your business right. Stay savvy by questioning ‘heard-it-from-a-friend’ tax tips and always feel free to reach out to professionals for guidance. Consider us your business's friendly resource, ready to help you navigate a reliable path. Unsure about something? Connect with us for a tax check-in or any questions to steer clear of costly mistakes.