Common S-Corporation and LLC Tax Errors

Most businesses wait until the last minute to complete their tax returns. Unfortunately, rushing to file your returns on time makes it difficult to avoid mistakes.

Are you in a rush to file your returns? Here are some common business tax return errors that you should avoid.

1. Not filing by the due date

Since the IRS has penalties for late filing, missing your business tax return due date can be costly. Therefore, it’s wise to hire a CPA for your LLC or S-corporation to ensure you file your taxes on time.

However, your company’s tax return date depends on your business type. For example, normally, sole proprietorship tax returns are due on April 15th, while partnership tax returns are due on March 15th. However, tax dates may change each year and keeping track can be challenging.

Luckily, a San Diego CPA is up to date with all tax laws, due dates, and regulations, ensuring you don’t miss any deadlines.

2. Underpaying estimated taxes

Self-employed business owners have to pay quarterly estimated taxes on their self-employment tax and business income. According to the IRS guidelines, if you expect to owe $1000 and above in taxes when you file your return, you need to pay estimated taxes.

Failure to do so can result in underpayment penalties.

3. Failing to report business income

If your business receives a 1099-MISC form for business payments received, you need to report your income on your business returns. This is because the IRS compares 1099s reported by payees to the 1099s filed from payers.

4. Missing or incorrect taxpayer ID numbers

This may seem like a trivial issue, but it can adversely affect your tax returns. Hence, make sure your taxpayer ID is correct and is right for your business type. For instance, for single-member LLCs, use the EIN (Employer Identification Number) for the LLC while for Schedule C filing, use the EIN for your business.

Need a CPA for tax returns?

At Abbo Tax CPA, we can help you complete your tax returns on time. Our team has the experience and knowledge required to prepare your taxes correctly, eliminate errors, and prevent penalties.