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How is the IRS Helping Small Business?

The IRS is working to make taxes more understandable and compliance easier for small–business owners.

Column by Barbara Weltman

Small Business/Self–Employed (SB/SE) Division of the IRS serves approximately 55 million taxpayers. The SB/SE division strives to educate these taxpayers and make ompliance easier.

Getting answers

About 80% of small businesses rely on tax practitioners to complete their returns. But questions arise throughout the year on how to handle various situations. Owners can turn to their tax experts and pay their fees or may find the answers they seek from the IRS for free. Small–business owners can find quick answers to common questions through the IRS Web site created for the SB/SE Division (see www.irs.gov/businesses/small/index.html). For example, information for starting, operating and closing a business, as well as obtaining an employer identification number (EIN), is a click away.

For information not provided on the Web site, owners can call the IRS Business and Specialty Taxline IRS at 1–800–829–4933.

Filing returns and paying taxes

Filing returns electronically can save business owners time and money, ensure accuracy and provide peace of mind. Now all business income tax returns can be filed electronically. Employment tax returns (Forms 940, 941 and 944) can also be filed electronically. Paying taxes online can be a help; you can schedule payments in advance and verify that they have been credited to your account. Go to www.eftps.gov. Note: EFTPS Express Enrollment is open to all new businesses when applying for employer identification numbers. These businesses will automatically receive by mail their EFTPS Personal Identification Number (PIN) and instructions for activating EFTPS enrollment.

Staying compliant

A key goal of the SB/SE is helping taxpayers comply with their tax obligations. Toward this end, the IRS offers a number of useful options:

  • Virtual workshops, where small–business owners can take any or all of 10 modules, on such topics as setting up a business, payroll and estimated taxes, at their convenience. These online modules can be accessed 24/7 at www.irs.gov/businesses/small/article/0,,id=97726,00.html.
  • Short videos on topics such as business or hobby, closing a business, and online auctions. These videos can be found at www.irs.gov/businesses/small/article/0,,id=97726,00.html.
  • Small Business Resource Guide, a CD–ROM from the IRS, SBA and other federal agencies that is updated annually to provide a wealth of accessible information.
  • Local workshops conducted in conjunction with local chambers of commerce, CPA societies and the National Federation of Independent Business (NFIB).

Looking ahead

Expect to see a continuing growth in eServices that can benefit small businesses. The IRS is also working at burden reduction to cut the time it takes to complete and file returns. For example, it has already alleviated some recordkeeping. Child care providers can use a standard meal rate instead of tracking every meal and snack given to children in their care. Businesses with up to four vehicles are permitted to use the IRS standard mileage rate when deducting car expenses—a simplification benefiting up to 800,000 small businesses. Look for possible timesavers for small business in the future, such as claiming a standard deduction for home office expenses in lieu of itemizing them.

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