Small business owners still need to think about taxes after the April 15 filing deadline.
They need to do some tax and financial planning, especially if they owed the government much more than expected for 2014. It’s a good idea to make an appointment with a tax professional now, says Jeffrey Berdahl, a certified public accountant with RLB Accountants in Allentown, Pennsylvania.
At that meeting, you need to review your finances for last year, and make projections for 2015. You may want to adjust your quarterly estimated payments for this year so you won’t be hit with another big tax bill.
But keep in mind, planning should continue throughout the year because your business may be hard to predict, Berdahl says.
“Incomes are very erratic, especially for business owners, from one year to the next,” he says. There can also be changes in federal, state and local tax laws.
Made a mistake?
If you discover you made a mistake on your return after you filed it, you have three years to amend it. If the mistake means you owe the government money, you should amend the return as soon as possible to minimize late payment penalties and interest on the tax you didn’t pay on time.
If you made an error in calculating income, taxes or deductions, you generally don’t need to amend your return. The IRS says it will redo the calculations. You also don’t need to send an amended return if you forgot to attach tax forms; you’ll get a letter from the government asking you to submit them.
You can find out more about amended returns at the IRS website, www.irs.gov.
A question from the IRS
If the IRS has a question about your return, you’ll get a letter from the agency within months, but it could also take a year or more, Berdahl says.
A letter asking for more information isn’t an audit. A common request some business owners get is for an explanation of why the income reported on a return doesn’t match the income on copies of 1099 forms the IRS has received. For example, freelancers who get multiple 1099s from companies they’ve worked for might have overlooked one, and not included it in their reported income. The IRS matches amounts on the forms it gets with amounts reported on returns.
The government has three years from the date you filed your return to ask for information. It also has three years to notify you that your return is being audited.