02 Apr Common Tax Problems or Scams and How To Avoid Them
With tax day approaching, scammers are rampant. Many people fall for their ploys, only to pay the penalty later when the IRS catches up with them. We asked a panel of professionals for advice on steering clear of these scams. Here’s what they had to say:
Calloway Cook, President of science-based supplements company Illuminate Labs
Many business owners, especially in the early stages of their company, try to spend money at the end of the year to reduce any tax liability. If they were profitable by $5,000 their first year in business, they’ll try to invest $5,000 back into the business before the tax period ends to maximize the efficiency of their dollars.
This makes sense in theory but often comes back to bite small business owners who aren’t aware that inventory purchases aren’t tax-deductible. If you run a supplement business and spend $50,000 on a manufacturing run, that doesn’t negate $50,000 of profit at the end of the year. There will still be a tax bill for the $50,000 in profit.
For those wishing to minimize tax liability at the end of the year, invest in marketing and brand awareness because those expenses are tax-deductible.
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