IRS Helps Small Business Owners
In accordance to the recently held small business week, the IRS sent out a PR article that proves to be helpful to small business owners since one of the hurdles that small business owners have to face is educating themselves in their federal tax responsibilities. Below is a copy of it.
WASHINGTON — The Internal Revenue Service today launched a campaign to help educate new self-employed small business owners about federal tax responsibilities.
The campaign kick-off coincides with the Small Business Administration’s annual Small Business Week, April 21-25, which recognizes outstanding small business owners for their contributions to the nation’s economy and their personal achievements.
“One of the biggest challenges faced by people starting out in business is understanding and meeting their tax filing requirements,” said Kathy Petronchak, commissioner of the IRS’s Small Business/Self-Employed operating division. “It’s a new, different and potentially overwhelming experience for them. We want new small business owners to know that the IRS has resources to help them learn about their federal tax responsibilities and avoid common pitfalls.”
The campaign will provide new Schedule C, Profit or Loss from Business, filers with improved and updated educational materials through a variety of channels, including IRS.gov, small business workshops and other outreach events.
Schedule C is filed by sole proprietors (one-owner businesses) as an attachment to their Form 1040 individual income tax return. Self-employed individuals with less complex situations – including business expenses of less than $5,000, no net losses and no employees – may be able to file Schedule C-EZ, Net Profit for Business.
About one in seven federal income tax returns includes a Schedule C or Schedule C-EZ. Taxpayers filed over 21 million Schedules C for tax year 2006, reporting overall net profits from sole proprietorships totaling more than $269 billion.
In this introductory phase of the campaign, IRS is offering some basic tips to avoid potential problems:
- Classify workers properly as employees or independent contractors as determined by law, not the choice of the worker or business owner;
- Deposit federal employment taxes, called trust fund taxes, according to the appropriate schedule;
- Start making quarterly estimated-tax payments to cover your own income tax and social security self-employment tax liability;
- Keep good records to protect your personal and financial investment and to make tax filing easier;
- Consider a tax professional to help you with Schedule C;
- File and pay your taxes electronically; it’s fast, easy, and secure;
- Protect financial and tax records to ensure business continuity in the event of a disaster; and
- Avoid abusive tax avoidance schemes such as the IRS’s 2008 “Dirty Dozen.”
