Just when it looked like the small businesses in this country might begin to bounce back, our elected representatives are working to close the “tax loopholes” used by small professional companies operated as S-Corporations:
H.R. 4213 American Jobs and Closing Tax Loopholes Act

At present, S-Corporation shareholders who are employees working in the business must take a “reasonable wage” via payroll. Any remaining profits may be passed through to the shareholders without being subject to self-employment tax (Social Security & Medicare). The new bill just passed by the House and on its way to the Senate will charge self-employment tax on the distributions that S-corporation shareholders take over and above payroll. It’s only for S-corporations providing “professional services” and only for those with three shareholders or less, but it’s a major hit to the small business recovery, nonetheless. According to the bill, “professional services” include “any trade or business if substantially all of the activities of such trade or business involve providing services in the fields of health, law, lobbying, engineering, architecture, accounting, actuarial science, performing arts, consulting, athletics, investment advice or management, or brokerage services.”

Let’s just keep our fingers crossed that our Senators see the folly of applying this tax only to small service businesses and not their bigger competitors.

The MicroEnterprise Journal has a great new blog post about the forecast for small business in 2010: Forecast: the small and microbusiness econocmy in 2010.

Among the highlights of the article is a discussion on one of the advantages that microbusinesses have over the big guys: lower overhead.  As a result small and microbusinesses should be among the first to recover and prosper as we head out of the recession.

Did you take a pass on the April 15th deadline last spring and file a six-month extension with the IRS?  If so, your new deadline is fast approaching.  All personal income tax returns on extension will be due on Thursday, October 15th.

Remember that the IRS has given you an extension of time to file, but not an extension of time to pay.  If your final return shows taxes due, be prepared for some interest and penalties for sitting on those taxes an extra six months!

If you’re self-employed, the IRS will expect you to have sent in your taxes through quarterly estimated tax payments throughout the year.  If you need help remembering those quarterly due dates, sign up for my quarterly email newsletter.  This newsletter is specifically targeted to self-employed business owners who have to send in quarterly estimated tax payments.  It comes out four times a year, just before each of the quarterly tax due dates.  In addition to a reminder to send in your estimates, it includes a short article regarding small business taxes.

SmartMoney recently listed a Top 10 list of Bookkeeping Mistakes to Avoid.  Among them are:

• Forgetting to track reimbursable expenses — All those little cash receipts for postage, parking, tolls and office supplies really add up.  If you don’t keep track of them, there’s no way you’re going to be able to deduct those expenses, or be reimbursed.
• Not reconciling the books with the bank statement each month — Reconciling isn’t sexy, like sales and marketing.  But it still needs to be done!  How else are you going catch errors and make sure you know your bank balance?
• Doing it yourself — Most small business owners simply hate bookkeeping.  Hey, if it’s not your cup of tea, outsource it! Having a competent, qualified bookkeeper can get the job done quickly and efficiently.  This will also provide you with a second set of eyes to catch errors such as invoices you forgot to send!

Find the rest of the list at http://www.smsmallbiz.com/taxes/Top_10_Bookkeeping_Mistakes_by_Small_Businesses.html