J.K. Lasser's Small Business Taxes 2013: Your Complete Guide to a Better Bottom Line

Common Errors and How to Avoid Them

The IRS has identified the most common errors that businesses make on their returns. Having 1 or more of these errors can trigger a closer look by the IRS, which is something you want to avoid. The most common error is failing to sign the return. Here are 25 of the most common errors on income tax, employment tax, and other returns:

1. Illegible or incomplete business name and address (e.g., use of individual name instead of the business name).

2. Missing or multiple tax periods on Form 941 (quarterly employment tax return).

3. Incomplete Schedule B of Form 941 (supplemental record of federal tax liability).

4. Entering the same amount from a previous return (e.g., entering the same amount on line 3, total tax withheld from wages, tips, and sick pay, and line 7d, current year’s tax withheld, on Form 941).

5. Missing Form 941 C (supporting statement to correct information).

6. Incomplete line 8 of Form 941 (total taxes after adjustments).

7. Missing or incorrect North American Industry Classification System (NAICS) code or incorrect principal business activity (PBA).

8. Incorrect sequencing of forms according to instructions to Forms 1120 (C corporations), 1120S (S corporations), and 1065 (partnerships and limited liability companies).

9. Unexplained short tax periods.

10. Missing or incomplete balance sheet.

11. Failing to properly apply limitations (e.g., 50% limitation on meals and entertainment).

12. Missing number of partners. ...