Tax time can be stressful for everyone, especially those responsible for handling their company's business tax filing. Every year the tax code changes and taxpayers have to stay up to date with all the new rules at the state and federal level. Even after checking everything twice, your company's tax return could end up delayed because of an undetected error. Before filing your taxes, make sure you are avoiding these common mistakes that could delay your return.
1. Check Your Math
Typically, most tax returns are now prepared with tax programs that don't require the preparer to add or subtract; however, some people still prefer to prepare their taxes using the paper forms. Mistakes can still be made using computer programs if the user enters the wrong information, puts the decimal in the wrong place, or puts the right number into the wrong field.
2. Check The Year
Fiscal filers should use the form for the year the fiscal year began. If the fiscal year began in 2014, then the filer should use the 2014 form. In some cases, tax filers mistakenly use multiple tax forms from different years. This is incorrect. For example, a 2014 Form 100 should not be completed using a 2013 Schedule H.
3. Accounting Form Overlap
When handling multiple filings throughout the year, overlaps are not uncommon. However, companies should not have overlapping accounting forms. Only one return should be filed for each accounting period. If there are changes to be made on a prior return, then an amended form should be used.
4. Accounting Period Overlap
Similarly, some companies make the mistake of overlapping their accounting period. In most cases, the Franchise Tax Board (FTB) must approve a change to the company's accounting period.
5. Amending a Tax Return
When amending a tax return make sure to file the amended tax return using the proper forms. When amending an FTB Form 100, 100W, or 100S, use an FTB Form 100X. Mistakenly using a regular form may cause a delay.
6. Using the Right Forms
It is important to double check that your business is filing the right forms. For instance, limited liability companies (LLCs) that are classified as a partnership may use FTB Form 568 or Form 565, depending on where they are organized, registered, or doing business. However, LLCs classified as a corporation should file an FTB Form 100 or 100S.
7. Use the Right Name
Businesses need to use their exact legal entity name in filing their returns. This is generally the name used to incorporate or register the company with the California Secretary of State, including any periods or commas.
8. Use the Right Number
Using the correct identifying number is important to avoid any unnecessary delay in processing your company's return. Partnerships use the Federal Employer Identification Number (FEIN). LLCs use the FEIN and the California Secretary of State 12-digit number or the 9-digit FTB number. Corporations use the FEIN and either the 7-digit FTB number or the 7-digit California Corporation Number.
9. Separate Payments
All payments remitted to the FTB should be sent individually for each entity and each accounting period. Payments should not be grouped together or sent together.
10. Identifying Payments
Payments to the FTB should include information correctly identifying the name of the entity, accounting period, and correct identification number.
While many of these errors seem simple to avoid, there is a reason the Franchise Tax Board regularly lists these and other errors among the most common business tax errors which could delay a return. If you have any questions about your tax filings, amended tax returns, or want to make sure you do not run afoul of the FTB, contact your San Diego tax and business attorneys.
Butterfield Schechter LLP is San Diego County's largest firm focusing its law practice on employee benefit legal services, business counseling, and tax. We will make sure your business stays up to date and in compliance with the latest changes in tax and employmee benefits law. Our firm can help you establish a custom plan that conforms with regulatory requirements and represents your best interests. Contact our office today with any questions on how we can help you and your business succeed.