According to the IRS, 40% of small businesses in the US pay a payroll penalty every year because they file tax incorrectly. They deposit the wrong amount for withholdings or they fail to deposit withholdings altogether. This is just one type of penalty that small businesses are charged with year after year.
Other than payroll penalties, small businesses are often penalized for late filing and late payments. The IRS charges 5% of your tax for every month you delay payment, so if your tax are 5 months late, you’ll have to pay an extra 25% on your tax!
Managing tax is one of the toughest parts of running a business. Large corporations invest in full-time tax professionals that keep the documentation in order and prepare for tax in advance to ensure that they are filed on time—small businesses don’t have that liberty. Small to medium-sized businesses have limited financial resources so they can’t afford to hire a full-time tax adviser, for them it makes financial sense to hire an external resource instead.
Let’s take a look at why small businesses should hire external advisers for tax preparation services:
Tax Advisers Are Up To Date with Tax
Tax laws are subject to changes; business owners may not be able to keep up with them, but tax advisers definitely do.
By delegating your tax preparation to a third-party, small business owners have more time to focus on their core functions and prospective opportunities.
Business owners are required to pay some types of tax multiple times a year. Small business owners may attempt to save costs by choosing to file tax themselves, they have to take into consideration how much time it takes up. It’s much more cost-efficient to hire an external tax adviser that has experience in tax preparation.
A Tax Adviser Can Tailor Your Business Plan to Reduce Tax
External tax experts don’t just calculate and file tax, but they also advise businesses on how they can save on tax. Bringing a tax adviser on board early on can help you devise strategies that can help minimize tax, the money you save can be put into back into the business.
Simple tasks like purchasing equipment, vehicles, and software all add to your tax, so it helps to have a tax adviser on your side that can help you minimize them.
A tax adviser will also explain to business owners the tax implications of taking out a loan and selling a portion of the business to investors.
Tax Adviser Proactively Help Reduce Tax
Tax Adviser offer tips on how to reduce tax. For example, small business owners often make the mistake of buying all their equipment; this increases tax and reduces revenues. Tax Adviser can tell you where it makes sense to lease equipment instead of buying them so you don’t have to pay as much in tax.
Business owners are often unaware of tax deductions; tax Adviser know when a company qualifies for tax deductions and can therefore help them save money.
Tax Adviser Assist with Compliance
Businesses are responsible for paying various types of tax that they aren’t always aware of. Many small business owners that have limited knowledge usually don’t know when tax are due and end up paying penalties later on.
Tax Adviser know when each type of tax is due, so businesses don’t have to worry about it.
Tax Adviser Communicate with Tax Officials on Your Behalf
Speaking to tax officials can be difficult when you don’t know enough about tax. Tax Adviser are well-versed in tax law so it’s easier for them to communicate with tax officials.
Tax agencies of all levels have a lot of power over your business, so it helps to have a tax adviser in your corner that can help you navigate through the process and keep out of messy legal problems.
Hiring an external tax adviser can make your life significantly easier and leaves you plenty of time to concentrate on growing your business.
Canberra Company provides comprehensive tax services in Santa Barbara. They can help you with tax planning, tax preparation, and IRS audit representation. Get in touch with them by calling (805) 962-1040. They can help you with safe and legal deductions that can save you thousands of dollars.