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The NASE’s Top Small Business Tax Tips

NASE’s National Tax Advisor Breaks It Down For Micro-Business

Washington, D.C., January 28, 2009 – Whether gathering documents and forms, studying receipts or working through math calculations, entrepreneurs are getting ready for April 15th one step at a time. It’s a good idea, says the National Association for the Self-Employed (NASE), because getting a jump on the filing season leaves more time to double-check forms and calculations and ensure all eligible credits and deductions have been taken.

Here are the NASE’s top business tax tips for the 2008 filing season, according to Keith Hall, National Tax Advisor and Certified Public Accountant:

• Gather Information for Your Tax “Arsenal.” In addition to the paperwork, make sure to find reliable materials to help with the completion and filing of the return. Sole proprietors can visit NASE.org to request a free line-by-line guide to the Schedule C form, including information on the home office deduction. Visit IRS.gov for detailed eligibility requirements for all credits and deductions. Now is also the time to decide if you will prepare your return or enlist the help of a professional.
• Cash or Accrual Accounting. While most small business owners and sole proprietors prefer cash accounting, some benefit from the accrual method, where one records a fee as income when a job is done, but before the payment is received. Before changing an accounting method, however, a business owner must receive IRS approval.
• Learn to Share and ALWAYS Report All Types of Income. Do not forget other sources of income, such as bank interest; business investment account interest and bad debt recoveries (from debts previously written off).
• Statutory Employees May Need Two Schedule Cs. A statutory employee is a person who receives a W-2 form with box 13, "Statutory employee," checked off. This includes most full-time life insurance agents, commission drivers, traveling salespersons and certain home workers. However, a statutory employee who receives trade or business income separate from the W-2 must file two Schedule Cs.
• Signs of the Times. When is a sign depreciable, and when is it a deductible capital expense? Permanent signs that are built to last more than a year must be depreciated. On the other hand, a tabletop tent card for advertising the daily dinner special at a restaurant is a fully deductible advertising expense. 
• It's My Party, but I Can't Deduct It. Or can you? A grand opening gala to introduce prospective customers to a new enterprise is deductible--including the band, signs, decorations, etc. However, the company’s big holiday bash isn't deductible as an entertainment expense, unless the attendees comprise existing and prospective customers, you discuss business at the party, and you have a reasonable expectation of generating business from the event. It would then qualify for a 50% deductible "entertainment" expense. 
• Do You E-File? Business owners who file electronically receive their refund much sooner than those who file a paper return. Plus, the computer will handle the math calculations for you.
• You Are Not Alone. There are many tax resources out there to help during filing season, including www.NASE.org and www.IRS.gov. Visit these sites often for the latest tips, tools and assistance.

Entrepreneurs preparing to meet the filing deadline can turn to qualified CPAs for help through the NASE’s TaxTalk program. Visit the site to ask a tax question, watch or download tax advice and browse the TaxTalk resource library. You can also follow Keith Hall on Twitter.

Find out more information about tax law changes for the 2008 tax season check the instructions on the 1040 form or www.IRS.gov.