Tax season can be stressful for any business, but for small business owners juggling multiple responsibilities, it can be especially overwhelming. Even seemingly minor mistakes can lead to tax liabilities, penalties, or IRS scrutiny. At Moskowitz LLP, our tax preparation team routinely helps business owners clean up avoidable issues—many of which come down to the repeated mistakes year after year.
Below are some of the most common tax preparation pitfalls and how to avoid them.
1. Forgetting to Track Estimated Tax Payments
Many small business owners are surprised to learn they’re required to make quarterly estimated tax payments. Forgetting—or not realizing—you need to pay throughout the year can result in underpayment penalties and an unexpectedly large tax bill in April.
If you’re a sole proprietor, partnership owner, or S-corp shareholder, estimated taxes are a critical part of your financial planning. Set calendar reminders, use accounting software to automate projections, or work with a tax professional to calculate and schedule your payments. Staying on top of these payments helps you avoid penalties and reduces the shock of a large year-end balance. Note you may be able to get a refund if you overpaid on estimated taxes.
2. Failing to Maximize Available Tax Deductions
Small businesses often leave money on the table by not taking advantage of deductions available to them. Common deductions that get missed include home office expenses, vehicle mileage, business-related travel, software subscriptions, equipment purchases, and depreciation.
Many business owners assume deductions are too complicated to track or that they don’t qualify when, in fact, they do. Others fear triggering an audit, which leads them to skip legitimate savings opportunities. The IRS allows deductions for ordinary and necessary business expenses—yet without proper documentation or guidance, many taxpayers fail to claim them.
A tax professional can help you identify and substantiate deductions you may be overlooking and ensure you’re minimizing your taxable income correctly.
3. Being Unorganized With Financial Records
Disorganized records are one of the biggest contributors to tax prep stress—and tax mistakes. Missing receipts, incomplete bookkeeping, and mixing business and personal expenses all make it more difficult to prepare an accurate return.
Poor records can lead to inaccurate deduction claims, unreported income, or discrepancies that draw IRS attention. Even worse, if you’re audited, lack of documentation can cause legitimate deductions to be denied. So be aware, you must be qualified to take the deduction and substantiate the deduction.
Spending time throughout the year to keep your books up-to-date, digitize receipts, and separate business and personal accounts will make tax season far smoother and reduce your risk of errors.
4. Filing Tax Returns Late
Missing a tax deadline doesn’t just cause stress—it can cost you money. The IRS assesses a Failure-to-File penalty that quickly adds up, and interest starts accruing on any unpaid taxes from the original due date.
Small businesses often file late because they are waiting on documents, struggling with disorganized records, or underestimating the time needed for preparation. Filing an extension gives you extra time to submit your return, but it does not extend the deadline to pay your taxes. Planning ahead—ideally with professional help—can prevent costly late filings and last-minute chaos.
Take the Guesswork Out of Your Business Taxes
Avoiding these common mistakes can save your business time, money, and stress. But even with the best intentions, tax preparation can feel overwhelming when you’re trying to run a business.
At Moskowitz LLP, we help small businesses stay compliant, reduce tax liabilities, and avoid the pitfalls that cause trouble with the IRS. Whether you need proactive tax planning, bookkeeping support, or help correcting past errors, our team is here to guide you every step of the way.
Contact a Tax Preparation Professional
For help with your business tax issues, speak to a tax preparation professional at Moskowitz, LLP. You can schedule a consultation by contacting us online or by calling us today at (888) 829-3325.
