Small Business Tax Update

Filing taxes for your small business is getting more complicated every day. With new rules being implemented all the time, even the most scrupulous business owner can end up making costly mistakes. While there is no substitute for professional tax help, it makes sense to stay informed of the latest regulations, and the latest IRS hot-buttons.

The following are recent developments of interest:

Increased IRS Scrutiny of Small Business:
These two Business Week articles discuss a new IRS initiative to uncover small businesses that classify what the IRS considers to be full time employees as independent contractors.

• IRS Targets Small Business for Improperly Classifying Independent Contractors
  
  
• The IRS Targets Independent Contractors

This Business Week article warns that entrepreneurs who fund a new business with 401 (k) funds may find themselves penalized by the IRS.

• The IRS Scrutinizes 401(k) Cash for Small Business

New 1099 Requirement—Increased Paperwork for Small Business Purchases.
As part of the recently past healthcare reform bill, the government added a requirement for small businesses to file 1099-Misc forms for every purchase they make over $600. This CNN Money article details the changes and outlines the significant impact for small business.

• Stealth IRS changes mean millions of new tax forms

Confused? The IRS Offers Help.
The IRS website contains many resources small business owners can use to learn about tax changes and make tax payments. Check out the Independent Contractors help page to learn more about properly classifying employees. Reading Audit Technique Guides can help too. These guides, created for tax auditors, provide instructions on how to audit on various issues and industries—for example, childcare businesses or executive compensation packages.

• Small Business and Self Employed Tax Center
  
  
• Independent Contractor (Self-Employed) or Employee?
  
  
• Audit Technique Guides