Tackling your small-business taxes

Any entrepreneur will likely roll their eyes at the complexities involving small-business taxes. Many complain about the intricacies of the IRS”™ rules.

Though IRS may be the agency everyone loves to hate, they only manage the tax laws and policies that Congress passes. And rather than being a bane to small business, the agency has taken several initiatives to be a benefit and resource to owners and the self-employed by providing much-needed guidance to tax procedures and requirements without those confusing “Gov-speak” terms. Thank you, IRS!

One of the chief improvements is a special website, 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? Take the time to understand this great resource.

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. Also visit the Industries/Professions section for specific information about tax regulations that may apply to your type of business.

The advice and information under Operating a Business is helpful for just about any type of small business. If you have employees, you”™ll find resources on hiring, employment taxes and wage reporting requirements. And the all-important Business Expenses section defines the types of costs you can and cannot deduct from your taxes.

For the self-employed and independent contractors, there”™s a full section that covers filing requirements, when a tax identification number is necessary, a listing of special publications and forms, responsibilities associated with operating and closing a business and other valuable information.

The Hudson Valley has many, many qualified CPA firms operating in support of small business. Check one out.

Ross Weale is an assistant director with SCORE. Reach him at rweale@optonline.net. SCORE is a nonprofit whose volunteers provide free counseling and training to small-business owners. Call 1-800-634-0245 or visit www.score.org.