Let’s admit when it comes to taxes it’s a complicated subject. There are myths concerning tax laws that are commonly accepted. Busting a few of these myths can help better understand how the tax system works and how it affects you as a taxpayer. Knowing more about taxes can make the system work in your favor. Having a tax plan and working with a tax professional like SWVA Tax & Accounting can help you. Here are a few tax myths that aren’t true.
Myth #1 Taxes Are Not Due Until the Due Date
Some business owners believe you have to pay taxes in full at the due date. What is more efficient is to have a year-round tax payment strategy. By paying taxes throughout the year you can set up a payment plan that makes things easier. A year-round tax payment strategy will help you with budgeting and influence decision making how money is spent. Having a year-round tax strategy will help you focus and keep your business in better financial health.
Myth #2 If You Have a Side Hustle You Don’t Need to Pay Taxes
You already have a main business that brings in income. Why not start something on the side for additional income? This is a great idea and showcases your entrepreneurial abilities. However, your money-making side hustle may not go unnoticed by the IRS. If your side hustle earns more than $12,000 a year, you’ll have to pay income taxes. Be careful of the amount of income your side hustle brings in.
Myth #3 The IRS Will Email You if You Are Owed a Refund
This myth is so untrue it’s almost funny. Almost. The IRS will never email you saying you will be owed a refund due to an error. This is likely a phishing scam targeted at getting you to send personal information like your bank account number or social security number. If you get a suspicious email concerning the IRS do not open any attachments or click any links. What is recommended is to forward the email to email@example.com and delete the email. Always safeguard your personal information so you won’t be a victim of identity theft.
Myth #4 You Don’t Need a Receipt
If you are a small business owner, always keep your receipts of anything you bought. The main reason for keeping physical or digital receipts is, it makes preparing your taxes easier at the end of the year. Another smart reason to keep all your receipts is if you get audited, you can prove what you bought. Better to have a receipt than no receipt at all.
Myth #5 Buying Bookkeeping Software Later When You Start A Business
You started a business and things in the bookkeeping department are a bit slow. Managing your taxes is not a simple task and the last thing you need to do is fall behind in bookkeeping. QuickBooks is a great tool to help you with all tasks related to bookkeeping. Staying organized from the very start will help you hit the ground running successfully.
Myth #6 A Home Office Can Be Written Off an Expense
If you are a small business owner you may have a “home office” you work out of. Use caution when trying to write it off as an expense. You can write off your home office as an expense if it’s a dedicated workspace. Sorry, your dining room table does not count as a home office. It has to be an actual workspace, where everything related to the business is done. This means 100% of the work is done related to the business.
Busting a few myths about taxes helps you be better informed. To get the latest tax information make an appointment with SWVA Tax & Accounting. Call 540-250-3198 to make an appointment or book online at www.swvatax.com/Contact to get a tax consultation today. Don’t delay call SWVA Tax & Accounting today. We’ll run the numbers, while you run the business.