4 Mistakes That You Don’t Want to Make When Filing Your Taxes.

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(They Could Land You In Tax Trouble)

It can be a stressful experience preparing your taxes and filing them. It can be even more stressful however if you make these mistakes that land you into tax trouble. It’s important to remember that if you make mistakes that are serious enough, you might end up triggering an audit of your tax return or owe more in back taxes.

It’s early to be talking about tax season, but if you’re planning on filing your own taxes this year, here are four mistakes that you should avoid.

Don’t neglect to report all your income

Whatever your sources of income may be, whether it’s your regular paycheck, a side gig, gains that you’ve made on the stock market, or interest that you’ve earned from deposits in the bank, it’s important to remember that you should account for all of it in your tax return. If you don’t, the IRS may come looking for it.

Every time you make at least $600 in income working as an employee of any description, you get a 1099 form stating what you’ve made. The IRS gets a copy of the form, as well. This means that it makes no sense to try to hide your income from the IRS.

When you make any kind of income, you should report it on your tax return. Technically, you should even record smaller chunks of income, the kind for which you don’t get 1099 forms.

Read more4 Mistakes That You Don’t Want to Make When Filing Your Taxes.

Why Early Adopters of Cryptocurrency Should Explore Their Tax Resolution Options Now

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The stunning rise in the value of Bitcoin, along with the myriad of cryptocurrencies, is surely one of the biggest financial stories of the 21st century, at least so far. What started out as a mere curiosity and niche project for programmers and geeks has quickly blossomed into a full-fledged financial asset, and an increasingly popular one at that.

For early adopters, the financial returns have been simply mind boggling. You may have heard about the generation of Bitcoin millionaires, and there are plenty of those newly rich investors to go around.

Given the rapid rise and relative anonymity of Bitcoin transactions, it was only a matter of time before the IRS caught on, and the tax agency has caught on – and caught up – in a big way. After years of taking a hands-off approach to cryptocurrency investments, the IRS is now paying close attention – and requesting the real world identities of those supposedly anonymous buyers and sellers.

While every investor in cryptocurrency should be aware of their potential tax liability, the problem could be even more acute for early adopters – the very investors who have profited the most from this unique form of digital payment.

As with all things tax, the Internal Revenue Service is likely to start where the big money is, and the tax agency has increasingly set their sites on early adopters. If you were prescient enough to buy into the promise of Bitcoin and other cryptocurrencies when everyone else was looking the other way, it may be time to settle up with the IRS.

Read moreWhy Early Adopters of Cryptocurrency Should Explore Their Tax Resolution Options Now

How to Recognize an IRS Tax Scam – and What to Do if the Tax Due Notice is Real

IRS Scam

Hearing from the IRS is bad enough, but being contacted by a scammer posing as the IRS is even worse, or at least just annoying and frightening. IRS scams are everywhere these days, and they take many different forms. Even sophisticated taxpayers have been fooled by these fakers, sometimes losing thousands of dollars in the process.

If you do not want to be the next victim, you need to educate yourself about how these scams originate, what forms they take and how the perpetrators prey on an inherent fear of the IRS.

Here are some warning signs to look out for when someone claiming to be from the IRS comes calling.

Read moreHow to Recognize an IRS Tax Scam – and What to Do if the Tax Due Notice is Real

Which Business Entity is Right for you?

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Choosing the correct business entity is important because each entity type has different legal protection and have different tax advantages. There are a few different types of business structures. There are Sole Proprietorships, LLCs, Partnerships, S-Corps, and C-Corp that you can choose to make your business.

Sole Proprietorships provide no additional legal protection from the business and your personal life because sole proprietorships are not a separate legal entity. They are seen as an extension of the individual and are taxed at the individual level on schedule c of form 1040. The individual will have to pay self-employment tax on the profits of the business.

Partnerships require at least two different partners to form, these partners can be businesses or individuals. In a partnership, there is additional legal protection for a partner’s personal assets which can become beneficial in the case of a lawsuit. Partnerships are taxed through form 1065, which could require additional tax preparation fees, but can add tax savings to the partnerships depending on how the income is structured to flow through to them on the individual level.

Read moreWhich Business Entity is Right for you?

How to Develop an Accounting System

working on accounting system

Having a sound accounting system can be the make or break aspect of a small business. Accounting systems are different than bookkeeping. An accounting system is the how the business handles each step of the financial system of the business. This can be the sales cycle, payroll, inventory management, accounts payable, and accounts receivable management.

One of the biggest areas that is important for small businesses is having a well-established sales cycle because if you do not know how much someone owes you or who owes you money you will not be collecting any revenue. It is important to establish a system that tracks either sales or products or tracking the services you provide for your customers. One way to do this is through invoicing. Have an invoice that says the date of the invoice, when the money is owed, what the invoice is for, and number them numerically so that they are easier to manage.

Read moreHow to Develop an Accounting System