Not paying attention to the business structure in which you operate.

Using an incorrect tax identification number.

Claiming a dependent that is not eligible. This includes your spouse, even if he or she works for you. The dependent must be a child under the age of 19 or a parent who is at least 65 years old.

Claiming deductions for personal expenses such as a home mortgage interest or medical expenses. These are only deductible if they are incurred while conducting business activities and would not be incurred but for the operation of your business (for example, no one would pay to fix their roof unless they owned their own home). Also, these deductions must be reasonable and necessary in order to take them on your tax return. For example, you can’t deduct an expensive vacation that was taken by your employees because it helped with employee morale! However, some costs related to operating a car may be deductible (such as gas and oil), but only up to certain limits; consult with an accountant before claiming these types of expenses as business deductions.

Claiming expenses that are not deductible, including those for personal use of business property. Remember, you must keep track of all your expenses by category and deduct only the ones allowed on your tax return.

Not filing a schedule C with your regular 1040 form in order to itemize deductions (for example, if you have a small business). Your tax professional can help you determine which deductions apply to you and provide instruction on how to file them.