Getting a letter from the IRS is never fun, getting a letter from the IRS saying you owe money is even less fun. Over a week ago I received a letter stating that I owed thousands of dollars in back taxes, fees and interest from over a year ago. I must say that I was in shock since this was the first year we had used an accountant for our taxes and I had not done my own. I guess I was so happy I didn’t have to do them that I didn’t even bother looking over them at all.
That was my mistake and my small business owner tip is:
Tip: Look over your taxes and make sure all your income is accounted for. It can save you from having to pay a lot of money later on in back taxes.
So my accountant and I looked over what had happened. We totally overlooked putting two K1’s from my S corporations (taxes flow to owners) on the tax return. Luckily we could make some adjustments to reduce the amount and he paid the fees and interest. Needless to say it was still a big chuck of change, but a learning experience nonetheless. So if you are a small business owner make sure to review your taxes and match up all your documentation before you send in those tax returns. Don’t make the same mistake I did.