Small business owners might utilize a number of do-it-yourself online resources in their operations. When it comes to tax liabilities, however, it is important to understand the potential limitations of online tax preparation programs or legal sites.
As a tax law firm, we appreciate the accessibility of online resources. Such options can provide an introduction to key tax concepts. Yet small business owners have more legal obligations than individual taxpayers, and it is important to understand those tax responsibilities. Since interest and penalties arising from tax disputes can quickly add up, our tax law firm advises a consultation with an attorney before making any hasty decisions.
For example, a new small business owner may have a conception of gross income that does not strictly comply with the IRS’s definition. The failure to report some types of gross income could land an owner in hot water with the IRS. An attorney can explain the items that generally qualify as gross income, including property, bartering, goods, services, and all income resulting from sales.
Another area that a tax attorney might inquire about is how a business keeps its records. In the event of an IRS inquiry, clear records may help stave off a tax audit. A proactive consultation with an attorney can set up record keeping systems that save time and also comply with legal tax obligations.
Obligations typically include employee taxes, as well as state and federal taxes on business profits. In addition, a business may have a different tax year than an individual’s annual calendar reporting requirement. Unlike individual income tax, a business must typically also make quarterly estimated tax payments.
Source: FindLaw, “10 Reasons to See a Tax Attorney for Help,” copyright 2016, Thomson Reuters