Federal Income Tax Obligations
The thought of spending time reading about income taxes probably rates right
up there with having a root canal without painkillers. What's more, if you're
like most small business owners, you pay an accountant or other professional
adviser to handle your taxes.
So why should you spend your time reading about income taxes? One good reason
is that you'll have a much better understanding of the various tax choices that
your tax pro may lay out for you. Also, with a little knowledge on selected
topics, you'll be able to identify potential tax advantages - and tax traps - in
time to do something about them. Wouldn't it be nice not to hear your tax
pro say, "I could have saved you a lot of money if you had told me sooner
that you were thinking about . . . ."
In helping you take control of your federal income taxes, our goal is to call
your attention to those income tax provisions most likely to affect a small
business owner. For starters, we've tackled these topics:
basics of tax planning explains the difference between permissible tax avoidance
and impermissible tax evasion.
your business form examines how your income tax obligations are affected
by the operating structure (sole proprietorship, partnership, corporation,
etc.) you choose for your business.
your trade or business discusses how the IRS distinguishes between a
business operated for profit and a hobby operated for personal satisfaction.
It also discusses the difference between a business and a passive investment
activity, provides guidelines on deciding whether your business activities
should be treated as more than one business, and discusses tax
identification numbers and IRS business codes.
year and accounting methods enables you to make an informed decision
when it comes to picking your tax year and accounting method.
income helps you determine the types of income that should be reported
on your business tax return, and discusses how to compute the cost of goods
sold for those who carry an inventory.
deductions helps you ensure that you don't miss any of the deductions to
which you're entitled by explaining the basic rules that apply to all
deductions, as well as the rules on recordkeeping. It also covers the
special deduction rules that are most important to small business owners
including the rules that apply to home offices, meals and entertainment,
travel, startup expenses, business gifts, casualty losses, employees' pay
and benefits, and compensation for the owners.
and taxes is a special section providing more details about the tax
treatment of automobiles that you or your employees drive for business
assets and depreciation explains how to handle the purchase, use, and
disposition of major business assets, from a tax perspective.
profit, loss, and self-employment taxes deals with what you have left
over, after subtracting your business deductions from your income, and
covers the issues of net operating losses (NOLs) and self-employment taxes
for business owners.
tax credits highlights the role that tax credits can play in minimizing
your tax bill.
with the IRS describes the procedures and forms used by sole
proprietors, partners, and corporations, and identifies the dates by which
you should plan on sending off checks to the IRS, including those for
estimated taxes. It also offers a few tips on avoiding tax audits, and on
handling an audit if your tax return is selected.
Among the Business Tools are a
selection of common IRS tax forms. They are in Adobe Acrobat
.pdf format, and you will need Acrobat Reader 4.0 to view the
files and print them. A free version of Acrobat 4.0 is available
in the Business Tools area as well.