WASHINGTON — There is a disconnect between how financially savvy small business owners think they are and how they feel about their grasp on taxes.
D.C.-based B2B research firm Clutch says 30 percent of small business owners it surveyed believe they overpay their taxes and could claim more deductions and credits. But 93 percent rate themselves as somewhat or very confident in their ability to accurately file taxes.
Many small business owners pride themselves on their ability to wear many hats, but when it comes to bookkeeping, it might be a good idea to bring in an expert or two, even if they don’t think it is worth the added expense.
“In the end, the costs of those outside resources may be more financially beneficial to your business in the long run, rather than trying to save a couple of pennies and doing it on your own,” Riley Panko at Clutch told WTOP.
Small business owners who think their book work is fine and have someone skilled look at their balance sheet, their profit and loss will often have mistakes or missing information pointed out.
“Simple things like losing receipts or misclassifying expenses. And if this is done over a long period of time, this can lead to a long list of errors that are hard to untangle, especially if things have to be looked back or the IRS wants a look,” Panko said.
A lot of small businesses — 27 percent by Clutch’s survey — don’t keep their business and personal finances separate, and almost that many who don’t say they’ve experienced challenges in mixing business expenses with personal ones in the last year.
Clutch used responses from 302 small business owners and managers for its survey, full results of which, along with accounting tips, are posted online.