Filing your taxes as a small business owner can be a daunting experience, and it’s not always easy to know who, or where to turn to for help and guidance. Many believe that the information published by the IRS is the definitive source of guidance for tax filing, but this may not be the case.
The definitive rules for filing taxes can be found in the Tax Code, a document containing many thousands of pages and one which seems to expand with every passing year. As well as being a seriously lengthy document, the code is not easily understood and deciphered. This has meant that many other documents have been compiled to try and make sense of the copious numbers of complex rules, and you can read more about them below:
The Tax Code itself:
Otherwise known as the Internal Revenue Code, this set of treasury regulations and revenue rulings contain the official and legally binding tax rules set by congress. Naturally, since any publications related to the Tax Code have come from the government, you can be assured that they are accurate and up to date. However, because the code is so lengthy and so complex, if you don’t interpret it correctly, you could be held liable for any errors that you make when filing, even if you state that you consulted the official guidelines.
Information from the IRS:
Most information provided by the IRS summarises the tax code in a series of booklets, and they are readily available and much easier to interpret than the code itself. That said, their version of the code and the way in which they explain it may not be strong enough to hold up in court.
You can also place a call to the IRS, but they readily admit in writing that there is the possibility they may give you the wrong answer to your query, and if you then go on to make an error when filing your tax return, you will be liable for paying the correct amount.
Taking advice and guidance from a tax professional:
You really can’t go wrong if you’re trying to decipher the tax code than turning to a professional tax expert, not only will they give you the best advice based upon their knowledge and experience, but they will give you the most accurate and up to date information that will be sure to see you staying on the right side of the IRS.
Enrolled agents and CPA’s will save you a lot of time and stress when trying to figure out your tax return, and there are sure to be a wealth of such professionals in your area.
Income taxation has always been complicated, and nothing seems to set to change. Consulting with a tax professional really is the only way to ensure that you fully understand what you are required to pay, or what you’re not required to pay. Do also be mindful of the fact that an IRS audit could determine that you owe a different amount, so it pays to set a little money aside to cover this.