Common Errors in Small Business Returns
Yep, it’s that time of year again.
If you are like me, you avoid common errors by having your accountant or tax professional handle income tax return filings for you.
That being said, there are some routine matters that I tackle myself.
I came across a great resource on accounting web that you might want to review if you administer IRS filings for your business.
Here’s quick rundown on some avoidable errors on small business filings:
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Form 941 – Employer’s Quarterly Federal Tax Return
• Entity information, including the name and address, is illegible and/or incomplete
• Schedule B, Supplemental Record of Federal Tax Liability is not completed
• Multiple tax periods on one Form 941
• No tax period marked on Form 941
• Line entries not identifiable
• Same entry repeated on lines 3 and 7d
• Form 941 C not included when necessary
• Form 941, Line 8 not complete.
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Form 2553 – Election by a Small Business Corporation
• Not filing before the 16th of the third month of the tax year in which the election is to take effect.
• Incorrect or missing Employer Identification Number (EIN)
• Missing Number of Shares on Schedule L, Form 2553
• Missing the “dates Acquired” section on Schedule L, Form 2553
• Missing or invalid effective date on Line E, Form 2553
• Missing information in Part II, Form 2553 when the selected tax year is other than a December 31 year-end, or 52-53-week tax year ending in December
• Filing Form 2553 to elect S-Corporation status for a Limited Liability Company (LLC) without first filing Form 8832 electing to have the LLC treated as an association taxable as a corporation
• Filing Form 2553 for a corporation intending to be a qualified subchapter S subsidiary (Q Sub) when Form 8869 should be filed for this purpose
• Form 2553 is received pursuant to Revenue Procedure Guidance, but does not include all documentation required by the procedural guidelines.