Can Self-Employed Workers Afford To Do Their Own Taxes?

Many new business owners and entrepreneurs are excited to build their business only to find out months or years later that they made a critical error in their early days. For some, this can lead to an overwhelming backlog of tax issues and complications that their business cannot survive. In the worst cases, it can lead to tax debt and liability that spills into the owner’s personal life.

Tax attorney Jeffrey Gartzman has spent the past 40 years and more representing businesses and owners across Georgia. With his background as a tax attorney and a certified public accountant working in tax law, Mr. Gartzman can help you reduce the burden a tax error has on your business and give you practical advice for your future. Mr. Gartzman helps people deal with the IRS and the Department of Revenue for the state of Georgia, including IRS tax audits and resolving tax issues.

Common Tax Errors People Who Work For Themselves Make

The potential for a tax disaster begins with the very start of a business or enterprise. From there, sales tax, self-employment tax forms, employee taxes and other issues quickly can compound the problem. As a self-employed worker, you will need to treat your tax filings with care well in advance of Tax Day. Businesses that sell products online or that participate in other partnerships will need to consider many other factors as well. By the time you realize how big your tax problems are, it may be too late. You need to hire a tax attorney.

What Are The Most Common Tax Mistakes Made By New Business Owners?

New entrepreneurs frequently misclassify workers as independent contractors rather than employees, triggering payroll tax penalties. Many fail to make quarterly estimated tax payments, resulting in underpayment penalties and interest charges. Inadequate recordkeeping prevents accurate expense deductions and creates audit vulnerabilities. Mixing personal and business finances eliminates the ability to substantiate legitimate business deductions. Some owners neglect to collect and remit sales tax in jurisdictions where their business has nexus.

What Are Common IRS Audit Triggers For Self-Employed Individuals?

Disproportionately high deductions relative to reported income raise red flags. Claiming 100% business use of vehicles rarely withstands scrutiny. Excessive meal and entertainment deductions attract attention. Reporting consistent losses year after year suggests hobby activity rather than legitimate business operations. Large charitable contributions disproportionate to income trigger reviews. Cash-intensive businesses face heightened audit risk due to underreporting concerns.

What Happens If I Make A Mistake On My Self-Employment Tax Return?

Consequences depend on error severity and whether the IRS considers it negligent or fraudulent. Minor mathematical errors typically result in automated corrections with small interest charges. Substantial underreporting triggers accuracy-related penalties of 20% of the underpayment. The IRS assesses interest on unpaid balances from the original due date. Fraudulent returns face civil penalties of 75% plus potential criminal prosecution.

How Far Back Can The IRS Audit Self-Employed Workers?

The standard audit period extends three years from the filing date. However, substantial underreporting exceeding 25% of gross income extends the window to six years. No statute of limitations applies when taxpayers fail to file returns or file fraudulent returns. The IRS can assess additional taxes indefinitely in these circumstances.

What Steps Should I Take If I Discover Past Tax Mistakes In My Business?

Immediately consult a tax attorney before contacting the IRS directly. Gather all documentation supporting corrected figures, including receipts, bank statements and financial records. File amended returns promptly to demonstrate good faith compliance. Consider voluntary disclosure programs if significant unreported income exists. Attorney Jeffrey Gartzman evaluates whether amended returns or other strategies best protect your interests while minimizing penalties.

Bring Your Self-Employment Taxes Back Under Control

In addition to his meticulous work in other areas of the tax code, Mr. Gartzman helps bring clarity and efficient answers to businesses across the Atlanta metro area. He will help trace your tax problems to their root issues and can work with you to negotiate the best terms for your case. You can call 770-695-7337 to reach The Gartzman Law Firm, P.C. or email them to find out more about your options.