Tune-up Your Tax Smarts
Most likely, business taxes are not among your favorite topics. But as we all know, taxes are one of life’s inevitabilities, and small businesses face more than their fair share. For small business owners, multiple levels of taxation at the city, county, state and federal levels, as well as complex and ever-changing rules and requirements, form a gauntlet of potential pitfalls.
Ironically, however, it is the Internal Revenue Service itself that has taken the initiative lately to try and clear some of the tax-related fog for business owners and the self-employed. After all, the IRS doesn’t make the tax laws, it just manages the mess.
One of the chief improvements is a special small business/self-employed (SB/SE) Web site created and updated by the IRS. Information on the site is free, easy to find and remarkably light on “gov-speak.” You’ll find it at www.irs.gov/smallbiz. This is a great place to give yourself a tax smarts tune-up. And what could be more authoritative than information coming from the chief tax honchos themselves?
A section called “Starting, Operating or Closing a Business,” for example, covers a tremendous amount of tax territory and includes much of the site’s most useful information. This is where you’ll find IRS rules on hiring your own kids or other family members, recordkeeping, employer ID numbers and selecting a business structure.
There’s also help answering a key tax-related question: Is what you are doing a true business or merely a hobby? If the IRS decides your “business” is really just a hobby, your expenses may not be deductible. Look for their nine-point checklist to see how you stack up.
The advice and information under “Operating a Business” is helpful for just about any type of small business. And if you have employees, you’ll find resources on hiring, employment taxes and wage reporting requirements.
The “Filing and Paying Taxes” section offers an overview of business taxes you may face and the forms you’ll have to file. And you’ll gain important insight into business income and expenses, tax credits, estimated taxes and personal assets in a business. The “Tax Calendar for Small Business and Self-Employed” is a handy scheduling tool available at the site.
To learn more about tax matters facing your small business, contact SCORE "Counselors to America's Small Business." SCORE is a nonprofit organization of more than 10,500 volunteer business counselors who provide free, confidential business counseling and training workshops to small business owners. Call 1-800/634-0245 for the SCORE chapter nearest you, or find a counselor online at www.score.org.