Tax time can be especially challenging for all of the very small businesses out there. Operations that have just a single principal, or just a handful of employees may lack the finance expertise or the resources of a larger corporation. Yet they ultimately have to account for all of their profits, losses, investments and expenses in a manner that is accurate and consistent with the current year’s tax code. You want to avoid errors but you also want to claim all the deductions to which you are entitled.
According to one recent survey, 29% of small business owners said taxes were the biggest challenge to the growth and survival of their business.
If you are one of these very small businesses, the good news is that you are in good company. In the years since the internet has transformed the way we do business, lots of entrepreneurs – including many internet publishers – have hung a virtual shingle, often operating over a laptop on a dining room table, or in conditions that are only slightly more formal.
As the tax filing deadline approaches, we wanted to share some helpful resources for small businesses. If you’ve had an online publishing operation for more than a year, chances are you’ve learned the basics - like the importance of good record keeping and the rules of the home office deduction. But the tax code is always changing and these resources provide a good primer on what’s new this year and where you can go for those last minute questions:
This is a detailed article on recent changes to the tax code (including smaller allowed deductions for business startup costs), as well as “the art of the deduction,” and tips for planning ahead for next year’s tax return.
The U.S. Small Business Administration exists to support American small businesses. If you are visiting the site for the first time, a good starting place for tax advice is this page on Getting Your Business Ready for Tax Season, which covers the ins and outs of record keeping, the potential benefits of declaring your business an S corporation, the importance of paying payroll taxes, and a lot more.
Yes, the IRS does want to help you understand your tax obligation. You can visit this web page to find a workshop near you.
Miscellaneous Tips on Mistakes You Can Avoid
There are several lists of common tax errors that small businesses make. Did you know, for example, that paying yourself too big a salary can cost you? It’s called “unreasonable compensation” and you can read more about that and some other common errors on this 2011 piece from CBS Marketwatch. See also: Five Common Mistakes from Startup Nation, and The Top 10 Bookkeeping Mistakes from allBusiness.com.
Don’t forget, unless you’ve been granted an extension, your taxes must be filed by April 15th. Good luck!