Tax compliance can be confusing and difficult to navigate, especially for those without a business or accounting background.

Failing to comply with tax laws carries heavy financial penalties from the IRS and can create other major liabilities for businesses and individuals. This is why it is so essential to understand the various aspects of tax compliance.

This blog will discuss some of the most common tax compliance mistakes your business can easily avoid!

Not Keeping Track of Your Taxes

For some, this may be a no-brainer, but you can ensure more accurate sales tax figures by maintaining a clear record on top of your income and expenditure throughout the year. This will also help you identify opportunities for tax deductions.

Whilst it may be tempting to do all your tax preparation last minute when the filing deadline looms, it reduces stress and the likelihood of inaccuracy if you simply record as you go!

Make sure to check your tax return deadlines so that even during busier periods when you may have less spare time, it's on your radar well in advance.

Regardless of how prepared you are for submitting your tax form, the process can feel quite daunting, especially considering the consequences if you submit it incorrectly. Many businesses will opt for a tax professional to help manage the process.

Not Seeking Professional Advice 

Managing your tax preparation without an accountant can be risky, especially when more complex transactions are involved in your business. You want to feel confident and reassured that the figures you submit are free from mistakes while being aware of tax relief opportunities.

Investing in an accountant's services can be extremely useful for your business in many ways. Not only can it provide certainty that you're adhering to the strict tax compliance regulations when preparing tax returns, but it can also help streamline your financial management and has the potential to boost your business's overall financial health!

Tax Preparers use automation software to easily access your tax data, meaning that simply providing them with good records of your transactions is enough to start the process!

Not Putting Aside Money For Tax 

Depending on your taxable income for the year, you may be required to pay HMRC a substantial amount. This makes it essential to plan ahead and put aside savings ready. If you don't do this, you risk ending up with a hefty tax bill that you don't have the money to pay for, which can have devastating effects on your business. Unpaid taxes can lead to penalties, which are a lot more than the cost of the initial tax!

Not Complying With Local Consumer Taxes When Selling Abroad 

When it comes to selling abroad, it's essential to be aware of the various applicable taxes and regulations.

One common mistake that many businesses make is failing to comply with local consumer taxes. In contrast, it may seem like a minor oversight, but the consequences of not following these rules can be significant. Not only could you face penalties and fines, but your reputation with customers and regulators could also be damaged.

To avoid this tax compliance mistake, it's crucial to do your research on the different countries you trade in and ensure that you are following all applicable laws and regulations. By staying informed and taking a proactive approach, you can avoid legal troubles and maintain a positive reputation in the global marketplace.

Implications of Different Types Of Employees 

The issue of misclassifying employees is a serious one that can have far-reaching consequences for both employers and their staff. For example, workers may be denied important protections and benefits when incorrectly identified as independent contractors.

Misclassification can also lead to IRS audits, legal action, and damage to a company's reputation. Despite these risks, however, many employers continue to misclassify their workers.

To ensure compliance with local labour laws, employers should make sure they are correctly classifying their employees and paying them accordingly.

Never Make A Mistake Again 

After reading this blog, we hope you feel more prepared and ready to tackle your taxes without any errors. Planning ahead, doing your research and investing in a tax professional are the key aspects that will help ensure you comply with tax regulations and are free from penalties.