What are the Common Mistakes People Make in Tax Planning?
You’ll likely have made several mistakes if you attempted to do your taxes on your own. Most people who take the DIY approach to taxes ultimately revert to the professional approach for a good reason. Tax planning mistakes are much less common when relying on a tax planning attorney.
Let’s take a quick look at some of the most common mistakes in tax planning in Monroe, LA.
1. Not Organizing Documents and Paperwork
Tax season is the time of the year to gather and organize all relevant paperwork. Such includes those pesky receipts and invoices of all the work you performed in and around Monroe, LA.
Whether you’re a business owner or a regular employee, the paperwork of your earnings and other financial transactions matters a lot during tax time. Organize all relevant receipts for your earnings in Monroe, LA, and you’ll efficiently maximize your deductions.
2. Delaying Tax Planning Until the Final Weeks
It is a mistake to delay tax planning until March or April. You can do your part to facilitate quick and accurate tax filing each spring by planning throughout the year. Even something as simple as grouping receipts by type or date facilitates tax planning.
So, don’t perform a mad scramble each April when tax season rolls around. View tax planning in Monroe, LA as a gradual process that takes shape throughout the year. You’ll find filing your taxes less challenging when spring rolls around.
3. Skipping Quarterly Estimated Income Taxes
If you own your own business or are an independent contractor and you make a decent amount of money, it’s expected that you will pay quarterly income taxes. However, those who don’t plan overlook the tax penalty for failing to pay such quarterly taxes and ultimately pay a steep price in the end.
Though your business can pay a lump sum tax at the end of the year, doing so is not financially prudent as it will spur a penalty for failing to pay estimated quarterly taxes.
4. Choosing the Wrong Business Structure
If you own a business, are launching a startup, or are thinking about creating a business, be aware that the type of classification you select for the enterprise matters in the context of taxes.
For example, paying a flat corporate tax rate might make more sense than paying a marginal tax bracket rate in the 20% to 30% range. There are also tax advantages to forming the business as a limited liability company or another type.
Meet with our tax planning specialists in Monroe, LA, and tell us about your startup. We will help you choose the business classification that minimizes your tax burden.
Schedule a Consultation With Niswanger Law in Monroe, LA
Our tax attorneys in Monroe, LA are here to help you plan your taxes and file them timely and accurately.