There's No Business Like...
Q: I am a frequent reader of BusinessWeek's small-business articles and am contemplating starting my own small business. Is there a book or Web site that you would recommend for small-business owners that offers information, tips, and advice on tax-related issues (i.e., what are deductible business expenses, what are not, etc.)? Also, is there a specific book or Web site that you would recommend for those in the arts and entertainment fields? For example, I know people who work in the film industry are supposed to be able to deduct the cost of a movie ticket as a business expense. Any help you can offer would be much appreciated. Thanks!
A: There are literally hundreds of Web sites and books containing small-business tax information. That's both the good news and the bad: Although the tax information you need is out there, you might have to wade through much that you don't need in order to find it. As someone contemplating a startup business, you might want to begin with www.sba.gov/library/pubs.html. Publication C-15 at that site, Selecting the Legal Structure for Your Business, is an overview of the tax rules that apply to your business, based on its legal entity -- that is, sole proprietorship, partnership, corporation, or Subchapter S corporation.
Your next stop could be www.irs.gov/smallbiz/index.htm, a section of the IRS site devoted to small businesses, which has a chapter on new businesses, among dozens of topics. The site also offers tax forms, a tax library, and a downloadable calendar for keeping track of when various taxes must be paid (payroll, self-employment, etc.). One caveat: Although the site includes an invitation to call or e-mail the IRS with specific small-business questions, the agency has a poor track record of answering such calls and providing accurate information over the phone.
If you want to find out how to avoid an audit or what to expect if you are audited anyway, a fairly comprehensive site is www.allbusiness.com, which also covers such topics as the tax consequences of buying or selling a business and how to define business income. As at the IRS site, you can download forms as well as IRS publications specifically for small companies (Business Use of Your Home and S Corporation Election Form, for example).
Likewise, www.taxplanet.com has a broad range of "all things tax for individuals," including news on pending legislation, tips to cut what you owe, a tax-season guide, and a comprehensive library. If you still haven't found what you need, try doing your own searching at www.taxsites.com, a directory of tax-related places on the Net, including links to all state tax sites.
To get specific information about tax rules relating to your occupation, check Web sites or institutions devoted to your line of work. For example, the Berklee School of Music site, has a page devoted to tax tips for musicians, including a checklist of allowable deductions. In addition, several professional tax preparers maintain Web sites with a wide range of information. The site www.Damontaxservice.com, by Damon Tax Service in Cincinnati, maintains a list of deductible expenses for people in the entertainment industry. Many tax preparers would advise you that, although information published in a Web site or book may be useful, it is not legally binding and is no substitute for one-on-one consulting with a tax professional.
Mainstays in the tax and accounting section of most bookstores are tax guides by the likes of Ernst & Young and H&R Block. All contain chapters on home-based businesses and solo entrepreneurs. Other standbys, among the dozens of tax books targeted specifically to the small-business owner, are Tax Savvy for Small Business: Year-Round Tax Strategies to Save you Money by Frederick W. Daily, now in its fourth edition, and J.K. Lasser's Financial and Tax Strategies for Family Business by Barbara Weltman.
It's not dramatic reading, but it might help avoid critical reviews from the IRS.
By Theresa Forsman in New York. Forsman covers small-business finance issues for BusinessWeek Online.
Do you have a small-business tax question? Tax professionals will answer your questions in the Tax Adviser column, appearing here Wednesdays. E-mail Taxadviser@businessweek.com. We will not print your name, address or phone number, but please provide this information.
To continue reading this article you must be a Bloomberg Professional Service Subscriber.
If you believe that you may have received this message in error please let us know.