Business Tax Help

Professional business tax help is available for those seeking to start new enterprises. Going into business sounds like an exciting venture and a chance to be your own boss. But if fledgling entrepreneurs are not prepared for the long hours, mounds of paperwork, tons of bookkeeping, and fiscal accountability, staying on a 9-to-5 job might be a better option. Most new owners won't have much trouble making money, but keeping it can be a problem; especially after paying suppliers, employees, and last but not least, taxes. Uncle Sam will have his hand out; and owners will need professional help to avoid incurring late penalties and excessive interest payments for delinquent tax obligations.

Entrepreneurship is not for the weak at heart, but with proper preparation and expert accounting, new owners can realize a lifelong dream and a measure of profitability. The Small Business Administration (SBA) website offers links to resources for business tax help and seeks to pair new owners with experienced entrepreneurs in similar fields. New owners should never be afraid to ask for wisdom, either from veteran entrepreneurs or revenue professionals. "Get wisdom, get understanding: forget it not; neither decline from the words of my mouth. Forsake her not, and she shall preserve thee: love her, and she shall keep thee. Wisdom is the principal thing; therefore get wisdom: and with all thy getting get understanding. Exalt her and she shall promote thee: she shall bring thee to honour, when thou dost embrace her" (Proverbs 4:5-8).

The first step in small business tax preparation is to determine which type of entity is applicable for specific owners. Companies can be formed as sole proprietorships with a single owner; as partnerships involving more than one owner; or as a corporation (or C-corporation) established as a separate entity to avoid liability of a group of individual owners. S-corporations are also formed by several co-owners but taxed at the same rate as individual taxpayers. Similar to partnerships, limited liability companies (LLC) are owned by several co-owners or members, but the liability of each member is limited to their investment in the LLC. For the purposes of clarity and abbreviation, this article addresses business tax help for sole proprietorships.

Sole proprietors carry the lone responsibility for the company, including profit and loss, tax liability, insurance, employee and contractor compensation, and overhead. Sole proprietors are required to file certain taxes and reports in keeping with the federal and state Department of Labor laws. To comply with U.S. Department of Labor regulations and those of a particular state, novice entrepreneurs can log onto DOL websites or visit a local state office. Owners can also browse www.dol.compliance for updates on employer workplace responsibilities and certain revenue issues. DOL representatives may also offer business tax help relevant to filing required employer payroll forms and quarterly reports. Representatives are on hand specifically to assist owners in computing and filing accurate employer reports and complying with labor laws.

Aside from filing self employment taxes on a quarterly basis, sole proprietors must also file federal and state income returns. An owner's income is determined by the net profit and loss realized from the venture. The total net profit or loss is entered on Form 1040 as income. To verify a company's net income, sole proprietors are required to submit Schedule C, Profit or Loss from Business, along with their Form 1040 Federal Income Tax return. Schedule C enables the Internal Revenue Service to review income earnings and expenditures. Sole proprietors should keep accurate receipts, payroll records, expense reports, and checkbook balances throughout the year to ease the process of small business tax preparation. Essentially an accounting balance sheet, Schedule C includes spaces for owners to fill in income and expense information and should be an accurate reflection of all business activity throughout the preceding year taxes are filed. Gross income is computed by adding gross receipts or sales and subtracting returns, allowances, and the cost of goods sold.

Essential to small business tax preparation is tabulating all expenses associated with running an enterprise. Promotional advertising; car and truck expense, such as gas and oil; commissions and fees paid to salespeople, contract labor for independent contractors and subcontractors, and depletion must all be tabulated. Schedule C should also reflect depreciation of major tools and equipment; monies paid out of employee benefit programs; insurance other than health, which would include General Liability and Workers Compensation; legal and professional services; and office expense. In addition to all of these items, if employee pension and profit-sharing plans, such as 401ks or IRAs, were owner-provided, these figures need to appear on the Schedule C; along with the amount of office rent or lease, repairs and maintenance, and supplies. Also included are taxes and licenses, travel, deductible meals and entertainment, wages, less employment credits, and other expenses.

Once receipts for all expenditures and account receivables have been tabulated to arrive at the gross income, owners can either tackle filling out the Profit and Loss statement themselves or solicit the services of a small business tax preparation agency. A good idea is to simply add up income and expense figures based on the Schedule C and take the tabulated figures to a Certified Public Accountant (CPA), tax preparer, or bookkeeper. The advantage to using professional business tax help is that a certified preparer or CPA will be familiar with the latest credits and deductions, regulations, and filing requirements imposed by federal and state governments. Additionally, many preparers can file returns electronically. If an owner is fortunate enough to get a refund, e-filing is faster than waiting months for a check. A word of advice to novice business owners: for at least the first year of operating an enterprise, don't try to handle small business tax preparation alone. Local SBA offices, U.S. and state Department of Labor offices, and independent preparers are all available to assist budding and accomplished owners comply with the regs and keep Uncle Sam happy.

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