Filing tax returns, doing accounts, paying tax, and dealing with the Revenue, are things that few people would put on a list of their favourite things to do. They are all important though. More specifically doing it correctly is important as getting it wrong can be costly. You can end up paying too much tax, or you might get a penalty or a fine. Here are six common tax mistakes that you should avoid.
- Not Checking Calculations And Inputs
Unfortunately, getting the numbers wrong in your accounts or tax returns is an easy thing to do. Some of the calculations are complicated, but it is possible to get it wrong even on the easy ones. For example, an incorrect amount or wrongly recorded field could throw your calculations out by a significant amount. You can avoid this by using accounts software to do most of the heavy lifting for you. You should also check the figures before submitting them, and always investigate discrepancies in bank reconciliations and other records.
- Missing The Deadline
Ensuring you get your tax return in by the deadline is one of the simplest mistakes to overcome. It will save you a penalty, and will help you stay on top of your tax payments. The best way to do this is to keep your accounts up-to-date, and file your tax return long before the final deadline.
- Not Paying Tax On Time
You will incur additional penalties if you do not pay your tax on time. That means money that should be yours being given to the Revenue. Nobody likes paying more in tax than their fair share, so try to avoid penalties and interest charges for late payments at all costs.
- Keeping Poor Quality Records
Completing a tax return, and ensuring it is accurate, is made much more difficult when you do not have good records. It will take you longer, you may have to include more estimates than is recommended, and you might miss important transactions. This all leads to potential inaccuracies which can result in you paying an incorrect amount of tax, missing deadlines, and finding that your returns come under closer Revenue scrutiny.
- Not Planning Ahead
Too many people leave their accounts and tax returns until they have absolutely no choice but to complete them. This is usually because a deadline is approaching. In many situations, this means they do not have the means to pay the tax bill on time so they either have to borrow the money or pay late penalties and interest charges. The more prudent approach is to keep good accounting records, and put money away every month, based on your sales and profits, so that you have funds to meet your tax obligations when they come due.
- Not Using An Accountant
Tax law is complicated so it is not surprising that most people don’t know exactly what they are doing. If you did spend time learning everything there is to know about tax you would not have any time left to spend on growing and developing your business. In addition, managing accounts efficiently and in a tax effective way is a time consuming process. These are areas where an accountant can bring real benefits to your business. This includes ensuring you pay the correct amount of tax so that you don’t overpay (and lose money) or underpay and get a penalty (and lose money). They will also ensure your return is submitted on time and can advise you on strategies and options for saving money on tax. Plus they will keep your accounts up to date which makes filing your tax return, dealing with the Revenue, and running your business, much easier.
If you would like to speak to an accountant about your taxes, your returns or your accounts, please contact a member of the Gilroy Gannon team today.