Small Business Tax Tips
Tax Refund Loans
A tax refund anticipation loan is tempting, especially if your business is experiencing cash flow issues and you need cash quickly. But, as a business financing instrument, tax refund loans are very costly. In fact, you do better to simply get an advance on a high-interest business credit card.
At tax time, the ads sound enticing. Fast Cash. Express Money. Instant Refunds.
Tax refund companies promise to get you that tax refund in just a few days or even on the spot.
Who wants to wait ten whole days or longer for a refund from the IRS?
You do.
According to the National Consumer Law Center (NCLC), firms that offer instant tax refunds are really peddling loans at rates of 60 to 700 percent interest.
Instead of signing away 10 percent or more of their hard-earned tax refunds, NCLC advises taxpayers to file their tax returns electronically and wait the two weeks that it takes to produce a refund. Paying a loan shark, even a speedy one, is never cost effective.
Start Your Taxes Sooner, Rather Than Later
Remember, it's never too early to start working on your taxes. If you start organizing receipts and records now, you'll be set to prepare your return as soon as your W-2s arrive.
How is that a benefit, you ask? Well, if you file in February, you'll most likely have your refund check in hand well before someone who files on April 15 and coughs up the cash for an immediate refund.
Top 5 Errors on Tax Returns
And speaking of taxes.The IRS reports that the most common errors on tax returns are also the simplest to fix. Here are the top five reasons that tax forms get returned:
- Incorrect or missing Social Security numbers
- Incorrect amount of tax entered from the tax tables
- Computational errors in figuring out Earned Income Credit for dependents
- Withholding or estimated tax payments entered on the wrong line
- Simple math errors in adding and subtracting amounts
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