Most small-business owners in the Bay Area do their best to pay their taxes on time and in full. While it may not be the most enjoyable part of owning a business, it is necessary to avoid trouble with the Internal Revenue Service. Sometimes, however, people make mistakes.
Filing taxes for a small business is not easy. Making sure you correctly filled out every form that applies to your business can quickly become confusing and complicated. Unfortunately, the IRS views it differently. According to them, small business owners are more likely to try to get out of paying the taxes they owe than than those who operate big corporations. Because of this, the IRS more heavily targets small businesses for employment tax audits.
While the truth behind the IRS's belief is not entirely clear, some say that anyone who is self-employed has greater opportunity to lie when it comes to taxes. It seems that certain businesses like real estate rental agents and construction contractors wind up facing audits more frequently than other types of small businesses.
Despite the IRS's big talk that small businesses are trying to skirt their responsibilities, only 3,700 cases were recommended for prosecution during the 2012 fiscal year -- a small number when you consider just how many small businesses there are nationwide.
If you are having trouble filing your taxes as a small business owner in the Bay Area, there are people who can help. And if you still end up facing an audit, know that an it doesn't necessarily mean you did something wrong. Working with someone who is familiar with tax law, however, may be a helpful.
Source: Bloomberg Businessweek, "How the IRS Thinks About Small Business Tax Scofflaws," Patrick Clark, Sept. 26, 2013