Accountants tend to wear several hats in the financial world; one of those being tax preparer. Income tax is a tax put on the income of an individual or business. The law requires all employed individuals and all businesses to file a tax return to determine whether they owe money or they receive a refund. Tax preparation is the actual process of preparing these returns, and if taxes are not prepared properly, it can increase the chance of being audited or committing tax fraud. Because tax filing informs the government of a person’s income and net worth, it is important that tax preparation be done correctly in order to meet federal requirements. Personal income taxes must be filed each year by every employed individual in the United States.
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Collecting records, finding the right forms, filling out forms properly, and paying attention to deadlines are the four basic steps to filing a small business return. When collecting records, be sure to have all business records gathered together before filling out any forms. You should have all records that report your business earnings and expenses in front of you. How you operate your business determines the type of form you will need to fill out. Many small businesses operate on a sole proprietorship which allows them to report all business income and expenses on a Schedule C attachment to their personal tax return. A Schedule C attachment form is two pages long and lists all expenses that can be claimed. You subtract your expenses from your business earnings to arrive at your net profit or loss and transfer the amount to your personal tax form. A Schedule C attachment is then included with all other tax items. Although LLC operated small businesses use a Schedule C attachment, a corporation of electively treating corporation LLC use a different type of form called a Form 1120. A Form 1120 is five pages long, more detailed, and includes a Schedule C section. The biggest disadvantage to this form is that is cannot be processed with your personal return. Filling out the correct form in its entirety is vital in making sure your business’ profit gains and losses …show more content…
Tax fraud, according to Investopedia.com, occurs when an individual or business entity willfully and intentionally falsifies information on a tax return in order to limit the amount of tax liability. Tax fraud is generally committed in attempts of avoiding payment of the entire tax obligation. Claiming false deductions, personal expenses as business expenses, and not reporting income are a few ways people commit tax fraud. The penalties of tax fraud vary depending on the type of fraud committed. An individual can expect to pay up to $250,000 and/or up to five years in jail for tax fraud. Corporations can expect to pay up to $500,000 in fines and the responsible party within the corporation could serve up to five years in jail. Tax fraud could be avoided by individuals simply being honest about their money, and by businesses carefully researching who they hire to handle their
Collecting records, finding the right forms, filling out forms properly, and paying attention to deadlines are the four basic steps to filing a small business return. When collecting records, be sure to have all business records gathered together before filling out any forms. You should have all records that report your business earnings and expenses in front of you. How you operate your business determines the type of form you will need to fill out. Many small businesses operate on a sole proprietorship which allows them to report all business income and expenses on a Schedule C attachment to their personal tax return. A Schedule C attachment form is two pages long and lists all expenses that can be claimed. You subtract your expenses from your business earnings to arrive at your net profit or loss and transfer the amount to your personal tax form. A Schedule C attachment is then included with all other tax items. Although LLC operated small businesses use a Schedule C attachment, a corporation of electively treating corporation LLC use a different type of form called a Form 1120. A Form 1120 is five pages long, more detailed, and includes a Schedule C section. The biggest disadvantage to this form is that is cannot be processed with your personal return. Filling out the correct form in its entirety is vital in making sure your business’ profit gains and losses …show more content…
Tax fraud, according to Investopedia.com, occurs when an individual or business entity willfully and intentionally falsifies information on a tax return in order to limit the amount of tax liability. Tax fraud is generally committed in attempts of avoiding payment of the entire tax obligation. Claiming false deductions, personal expenses as business expenses, and not reporting income are a few ways people commit tax fraud. The penalties of tax fraud vary depending on the type of fraud committed. An individual can expect to pay up to $250,000 and/or up to five years in jail for tax fraud. Corporations can expect to pay up to $500,000 in fines and the responsible party within the corporation could serve up to five years in jail. Tax fraud could be avoided by individuals simply being honest about their money, and by businesses carefully researching who they hire to handle their