I have selected 10 of the Most Common Accounting Myths that I often hear from business owners. Myths are sometimes created accidentally but with some basis in truth. People like helping others with advice and that is a great thing! However what has happened in one persons situation may not work for another person. Tax laws are created to provide clarification of the items that are deductible and apply to your business. Otherwise, we would write off all living expenses. If we write of all expenses we will not have money to support the community and/or the world. Proper accounting protects ethical and honest business owners from dishonest practices of other business owners. Accountants work to help you find the tax deductions and credits that work for you through tax planning, proper bookkeeping, financial statement preparation, reporting, payroll and more.
Here’s my top 10 commonly heard myths:
- Myth – My business is small, therefore, I do not need an accountant. Accounting Truth: You may not need an accountant to do the hands on work but you can benefit from Accounting advice. Accountants will advise you at very affordable pricing.
- Myth – Processing payroll taxes or self-employment taxes are only for corporations, big business or businesses with employees. Truth – You will need to process payroll or self-employment taxes on monies withdrawn or used for personal expenses. Your tax type depends on your business structures.
- Myth – Payroll software with payroll calculations and tax payments are all I need for payroll. Truth – You need more than software. Accountants help you to comply with Department of Labor, Internal Revenue, and State regulations regarding employees. There’s more to payroll than printing a pay check.
- Myth – I don’t need separate bank accounts for business and person expenses. Truth – Yes you do. The IRS may limit some of your expenses if your business and personal are co-mingled. Also, this makes you more susceptible to an audit if personal and business are not differentiated. Business owners tend to write off personal expenses as business expenses when the expenses are combined.
- Myth – 50% of all money earned is for taxes. Truth -Your tax percentages vary person to person and business to business because of tax laws, credits, and deductions. An accountant can help you determine the correct tax percentage for you.
- Myth – Waiting until tax time to speak with your tax accountant. Truth – Tax accountants usually offer tax planning throughout the year or bookkeeping services. If not, usually the accountant can refer you out to someone that can help you. Lots of accountants work together depending on their focus in accounting.
- Myth – I need a lawyer to help me file a trademark or determine my business structure or FREE is better! Truth – Accountants can assist you at more affordable pricing.
- Myth -Free Generic Accounting Advice is better. Truth- All I will say is…..you get what you pay for….seek a qualified individual. Each experience may not be the same for your situation. There are exemptions and limits that affect each person differently. You will save time and money in the long run by consulting with an accountant.
Accounting consultations will help you find the deductions, credits, accounting systems, and bookkeeping systems that work for you and your business. Check with a professional regarding accounting advice from non professionals. I offer Ask The Accountant Sessions on Wednesday and Thursdays. Join Ask the Accountant