Tax Returns
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Tax returns include all the required paperwork that accompanies the remittance of taxes to the appropriate government agencies, the largest of these being the Internal Revenue Service (IRS). The IRS issues more than 650 different forms for taxpayers to use in calculating and paying their taxes (the complete list is available through IRS publication 676, Catalog of Federal Tax Forms). Each form applies to a different situation or purpose. For example, Form 1065 details the income received by a business operating as a partnership, and Form 8826 relates to expenses claimed for business use of a home. Perhaps the most familiar type of tax form is the annual personal tax return, Form 1040, that must be completed by millions of taxpayers each year.
Considering that the laws have undergone no fewer than eight major revisions in the past two decades, as well as numerous minor changes, it is no wonder that tax return preparation can be exceedingly difficult and time consuming for small business owners. Since the average small business person can ill afford to call a tax pro with every question, time will be necessary to make one's way through the maze of tax forms and instructions. Fortunately, a great deal of information is available to help in this task. Sources include IRS publications and help lines, self-help tax preparation guides and software, trade associations, periodicals, and online services.
It is important for small business owners to maintain a personal awareness of tax-related issues in order to save money. Even if they employ a professional bookkeeper or accountant, small business owners should keep careful tabs on their own tax preparation in order to take advantage of all possible opportunities for deductions and tax savings. Whether or not a small business owner enlists the aid of an outside accountant, she should understand the basic provisions of the tax code. Just as one would not
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turn over the management of his money to another person, he should not blindly allow someone else to take complete charge of his taxpaying responsibilities. Knowledge of tax structures and provisions can have a powerful impact on the potential for maximizing profits. Knowing what the tax law has to offer can provide a company with an advantage over competitors who don't use tax planning efficiently.
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