A top priority of small businesses across country is tax relief from both the amount of taxes owed and from the cost of compliance.
The vast majority of small businesses are organized so that the owner pays the business taxes as a component of his or her individual income tax liability rather than at the business level – these are known as flow-through businesses and include partnerships, S Corporations and sole proprietorships. At the end of 2010, tax provisions put into law in 2001 and 2003 will expire resulting in a tax increase on small business flow-through income. Raising taxes during a recession would be counterproductive so Ranking Member Snowe and Committee Republicans will be seeking ways to avert this tax increase.
Not only is the level of tax a question but the crushing burden of tax compliance continues to be a major priority of America’s small businesses. According to the Small Business Administration’s Office of Advocacy, small businesses spend an astounding 8 billion hours each year complying with government reports. They also spend more than 80 percent of this time on completing tax forms. What’s even more troubling is that companies that employ fewer than 20 employees spend nearly $1,304 per employee in tax compliance costs; an amount that is nearly 67 percent more than larger firms.
For that reason, Ranking Member Snowe has introduced a package of proposals that will provide not only targeted, affordable tax relief to small business owners, but also simpler rules under the tax code. By simplifying the tax code, small business owners will be able to satisfy their tax obligation in a cheaper, more efficient manner, allowing them to be able to devote more time and resources to their business.
Related Links:
The Internal Revenue Service’s Virtual Small Business Tax Workshop