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Peacock & French CPAs
Sep 01, 2022

For business owners, cutting costs is always a concern. However, foregoing professional help on your business tax return isn’t one of the expenses that you should cut. Keep reading to learn why business owners shouldn’t attempt to file their own taxes.

For business owners, cutting costs is always a concern. However, foregoing professional help on your business tax return isn’t one of the expenses that you should cut. The cost of working with a CPA pays off significantly for most business owners, while attempting to file your own business tax return can have serious consequences. Keep reading to learn why business owners shouldn’t attempt to file their own taxes.

Claiming the Right Deductions

Deductions can make a huge impact on your personal tax return, but the impact they make on your business return can be even larger. Business owners have many opportunities for deducting appropriate business expenses; however, understanding which expenses you can deduct and ensuring you claim them properly can be much more complex than any personal deductions you may have handled in the past. Attempting to file your own tax return leaves you at a higher risk of missing out on deductions that you qualified for. This means you’ll pay more in taxes for your business every year that you miss out on that deduction, which can add up quickly.

On the other side of the coin, it’s very possible that you will claim certain business deductions incorrectly. For example, many business owners incorrectly claim home office and business vehicle deductions, not fully understanding the requirements for these tax deductions. You might claim the home office deduction, not realizing that you need to use that office space exclusively for business purposes in order to qualify; or, you might deduct your business mileage incorrectly, not understanding which trips actually qualify. These incorrect deductions could land you with an unpleasant IRS audit and a higher tax bill—potentially with added fees and interest applied to it as well.

Working with a business tax professional can help you to better understand the business tax deductions that you qualify for, and ensure that you claim them correctly. This helps you to maximize the tax benefit of those deductions while minimizing the odds of facing repercussions for claiming incorrect ones.

IRS Audit Representation

Speaking of IRS audits, it’s important to note that business owners are more likely to be subjected to them than taxpayers who only file with a W-2 and other basic tax documents. As a business owner, your taxes are far more complicated than the average income earner, which means mistakes are more likely, and the IRS is eager to ensure that those mistakes are corrected. Business owners must be prepared to undergo an IRS audit and support all of the numbers reported on their tax returns each year. This can be extremely difficult to do on your own, especially while trying to operate your business at the same time.

When you file your taxes using a CPA, we are able to represent you during an IRS audit. This allows us to submit documents on your behalf and communicate with the auditing agent to ensure that the audit goes over quickly and smoothly. This allows you to focus on running your business, and can make going through an audit a lot less stressful for you.

Planning for Future Taxes

When most business owners file their own taxes, they’re usually focused exclusively on their past financials. After all, that’s what you’re reporting on your tax return. However, when you work with a business tax professional, we can help you look to the future as well so that you can actively plan and prepare for next year’s taxes. Why does this matter?

The truth is, there’s a lot more that business owners can do to minimize their tax liability when they engage in proper tax planning throughout the year. Examining your typical income and expenses, accounting for changes in those numbers, and making important financial decisions with their tax implications in mind can help you to take advantage of deductions and reduce what you’ll owe when you do file your tax return. Ultimately, working with a business tax expert can save you significantly more in taxes than what you’ll pay to your CPA.

If you’re a business owner and you’ve been filing your own taxes, we strongly encourage you to reach out to Peacock & French CPAs today to schedule a consultation with one of our business tax advisors. We’ll review your past tax returns with you to find any discrepancies and missed opportunities, and provide you with the guidance and advice you need to make tax-smart decisions for your company in the future. Call now to schedule an appointment with a CPA.