Pro Or No: Taxes And The Home Business
By Jim Biscardi
The Internal Revenue Service has its hands full every April when Uncle Sam holds his hand out with his fingers gently waving towards himself saying, "Show me the money." At that same time Certified Public Accountants burn the midnight fluorescent bulb with the hopes of finding pleasing results for ignorant clients. Across town in the basement of an office, which his children affectionately call "the dungeon," the typical home business owner fiercely rubs his own brow in the hopes of finding just one more deduction. Tax season has arrived.
The typical home business owner stresses out more in April than in any other season. Christmas, when his business may be booming and orders come in faster than he can write them down, or summer when his clients are demanding things that no sane person would demand in the midst of gorgeous, sunny days that call his name almost audibly to come and play-both of these seasons pale in comparison to April. The home business owner has two basic options and one non-negotiable choice to make regarding taxes.
First and foremost, we must consider the non-negotiable choices, which in and of itself is an oxymoron. He must pay his taxes. While nothing might please him more than just relaxing in April, listening to the pitter-patter of spring rain and thinking about the tulips pushing their delicates leaves through his moistened soil, he must pay his taxes. Though he dreams about finding Uncle Sam in person and simply telling him where to put his blankety-blank forms, he must pay his taxes. And though he wants nothing more than to just forget that he had an incredible year with oodles of income that means his family can now take that coveted vacation to Disney World, he must pay his taxes.
After all, history has shown him the results of those who do not pay their taxes. Al Capone, for example, ordered executions of some of his own men who betrayed him. He ran black market liquor operations in the midst of prohibition, and yet what did police finally send him to prison with? Tax evasion. Consider this: if Capone had simply done what every home business owner curses about every 12 months, he could have gone on with his luxurious, whacking-the-other-guy life. Business owners, good and bad, must pay their taxes.
Home business owners then have a basic choice once they move past the non-negotiable decision of whether or not to pay in the first place. Who will file their taxes? Will they turn to a Certified Public Accountant, the lady or guy down the street that actually obtained a degree and passed an extensive, written exam focused on just this sort of thing, or will they consider a box with a silver disc that tells them how to file? Their choice will ultimately determine a couple of things. First, it will determine how much they will pay in taxes. Second, it will determine if the IRS will flag them as suspicious and demand an audit, which will mean at least another month of stress. Certainly both the CPA and the cardboard box have their benefits.
Regardless of what the home business owner chooses, he should take care to save every receipt possible throughout the year. When he does this, taxes become less of a burden regardless of who does the filing. If he chooses to file, he will have the necessary documentation when he wants to deduct that package of Bic pens that he bought back in May. If he chooses the CPA, then the CPA will have the necessary documentation. Ultimately, it does not matter who does the taxes at this point, because either party needs the receipt.
Taxes clearly burden the business owner. However, we all must pay them, business owner or not. In the end, the final burden rests on the one who writes the check, thus business owners must consider their options carefully to see who can help them retain the most profit.
About the Author: Jim Biscardi is owner of Dynamic Wealth Systems, LLC and writes on a variety of subjects. To learn more about this topic Jim recommends you visit: www.DynamicWealthSystems.com
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