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Can you face penalties for business accounting errors?

On Behalf of | Dec 6, 2021 | Business Formation |

Accounting can be a long-winded and very tedious task. This is the kind of job that is best handled with the use of software. It isn’t something you want to spend long hours doing by yourself. The potential for irritation and fatigue is very great. Using software will help you avoid penalties for accounting errors.

You need to be careful during accounting

It’s no secret that you need to take your accounting duties very seriously. The potential for error can be very great if you aren’t paying attention.

There are many different types of errors that you can make, including the following:

  • Mislabeling specific expenses
  • Not calculating expenses in the right manner
  • Failing to list the whole of your inventory or erring as to its total value
  • Making errors during the process of accounting itself

There isn’t much margin for error when it comes to reporting your taxes. Your best bet is to leave this duty to a professional.

What are the penalties for accounting errors?

You need to be at your most vigilant when it comes to filing your taxes. This is a matter that, if not handled in the correct manner, can lead you into trouble.

There are definite penalties for accounting errors that lead to the underpaying of your taxes. These can include a fine of up to $1,000 plus 50% of the income that can be derived from each of the errors on your return.

The IRS can choose to waive these penalties if they determine that the errors were not intended as deliberate fraud. In general, it’s best to make sure that you leave the handling of your taxes to a qualified expert. This very much includes the act of accounting.