Small Businesses & Taxes

[Anonymous]

DH has a small company. He currently has 12 employees. The Republicans keep talking about taxes and small businesses but the problem isn't the tax rate. Yes, I would prefer to pay 13% like Romney but we don't mind 36%. The problem is paying estimated taxes on unrealized income. Paying taxes on income not received is a massive burden. I wish politicians would address this issue. I really would like the whole tax system overhauled because our CPA costs are rising faster than our insurance costs! Any other small business owners feel this?

I suppose this is more of a vent. Republicans are just irritating me off with their "we're for the small business owner" when they don't even understand the problems and the solutions don't address them.

[Anonymous]

Yes. Not to mention, the IRS headaches due to our ridiculously complicated tax system, and the fact that the CPA has no accountability for F-ing up the filing 3 years in a row. We HIRE a CPA because we don't UNDERSTAND the tax code, so yeah we 'signed off' on it, but we didn't completely understand every calculation they did!

[Anonymous]

Anonymous wrote:DH has a small company. He currently has 12 employees. The Republicans keep talking about taxes and small businesses but the problem isn't the tax rate. Yes, I would prefer to pay 13% like Romney but we don't mind 36%. The problem is paying estimated taxes on unrealized income. Paying taxes on income not received is a massive burden. I wish politicians would address this issue. I really would like the whole tax system overhauled because our CPA costs are rising faster than our insurance costs! Any other small business owners feel this?

I suppose this is more of a vent. Republicans are just irritating me off with their "we're for the small business owner" when they don't even understand the problems and the solutions don't address them.

This is an interesting question. You're referring to the requirement to pay quarterly taxes, yes? But I think you're describing a cash-flow burden, not an actual tax burden.

[Anonymous]

Anonymous wrote:DH has a small company. He currently has 12 employees. The Republicans keep talking about taxes and small businesses but the problem isn't the tax rate. Yes, I would prefer to pay 13% like Romney but we don't mind 36%. The problem is paying estimated taxes on unrealized income. Paying taxes on income not received is a massive burden. I wish politicians would address this issue. I really would like the whole tax system overhauled because our CPA costs are rising faster than our insurance costs! Any other small business owners feel this?

I suppose this is more of a vent. Republicans are just irritating me off with their "we're for the small business owner" when they don't even understand the problems and the solutions don't address them.

This makes little sense. Which estimated taxes are you referring to? You and DH's personal income and employment taxes? If you feel that you will not be receiving all of your accounts receivables that your accountant is using to calculate your estimateds, then tell him and send in less estimated taxes. You can write off bad debts too if you think you will not get paid.

[Anonymous]

My brother owns a small business and my mom has worked for a small business for 40 years and keeps the books. They've never had trouble with paying estimated taxes. But that might be the nature of the business itself I don't know. It's governmental regulation that drives them nuts. That seems to be the biggest burden for both of them.

Get your truck licensed this way, estimate miles driven on federal highways and file this federal form, make sure you are registered over there, don't forget worker's comp, this is what you gotta do to have a cafeteria plan for health insurance - file these 47 forms. And so on.

[Anonymous]

We pay estimated taxes and while it requires planning/budgeting it does not affect our tax burden. I believe you have an option to align the payments with the cash flow if it is very uneven. It sounds like you need a better accountant rather than a change in tax policy.

[Freeman]

Anonymous wrote:We pay estimated taxes and while it requires planning/budgeting it does not affect our tax burden. I believe you have an option to align the payments with the cash flow if it is very uneven. It sounds like you need a better accountant rather than a change in tax policy.

I second the above. There's no reason you should be paying estimated tax payments on income you have not received, and there are easy-to-find instructions detailing the various ways these situations can be handled. Any competent CPA should be able to handle this for you easily. If they can't, or if they are charging you a fortune for doing it, then you should find another one. On the other hand, it might not be the CPA's fault if your business records are not well maintained. If they have to spend hours just trying to determine what figures they need, then that would also explain high fees being charged. Either way, the tax policy itself doesn't sound like the primary issue here.

[Anonymous]

Don't small businesses have the choice between running on a cash basis vs. accrual accounting method? I think your husband's problem is solvable.

[Anonymous]

We had an issue with the IRS, they claimed we didn't the capital deduction form. They sent us 3 letters and all 3 were in error. The first was the deduction form (we mailed it back to them), then they mailed a second letter saying our AMT was wrong because of the deduction (we mailed that back). We had to respond back each time wasting our CPA's and my time. My CPA said that he has never seen this amount of harassment and enforcement attempts ever in the past. I think it is going to get worst after Obamacare results in the hiring of 16,500 new irsenforcement employees.