Tax Tips and Insights for Small-Business Owners

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Being a small-business owner can be challenging, especially during tax season. Whitman School of Management Professor of Accounting Practice John Petosa offers tips for small-business owners filing their taxes.

1. Put aside enough money to pay all the required taxes such as sales tax and payroll  taxes.

Petosa recommends that small-business owners place a third of their receipts in a separate bank account to use when paying their taxes.

Be aware of the filing deadlines. Sales tax is usually due quarterly. Income taxes for both individuals and corporations are also due quarterly. Payroll taxes are usually due by the 15th of the month following the end of the month being paid.

2. Know what to do if you cannot pay an income tax bill in full when it is due.

“Always file the return as required,” said Petosa. “It is a crime not to file the return; it is not a crime if you can’t pay. The IRS will send a notice of deficiency and will often work out a payment plan, if the amount is below certain thresholds.”

Petosa cautions small-business owners that penalties and interest may apply, but encourages them to explore loan options to help avoid the steep interest costs.

3. Keep track of tax liability year-round.

There are many ways to keep good books and records. Software packages are available that help small-business owners track their income and receipts. Small-business owners may consider hiring someone a few hours a week to input activity.

“Too often small-business owners think they have to do everything,” said Petosa. “However, it is usually wiser to hire someone to do tasks the owner isn’t good at so that the owner can focus on things that they are good at, such as selling!” 

4. Be aware of what is happening with the IRS and taxation.

The IRS has many publications and websites with easy to understand information regarding taxes, policies and regulations.

“Business owners can also get information by calling the 800 numbers,” said Petosa. “However, please keep in mind that while the IRS staff on the phone is there to help, the advice that they provide cannot be relied upon during an audit.  It is up to the taxpayer to obtain his or her own information and advice.”

John Petosa

John Petosa

Professor of Practice John J. Petosa ’95 JD is a licensed CPA and attorney who currently serves as the CFO and general counsel of a food distributor in Syracuse. He has a private accounting and legal practice that focusses on tax preparation, tax representation before the IRS and New York state, real estate law, business law and estates and trusts. Petosa is also a member of the board of directors of Geddes Federal Savings and Loan Association, a local bank. He was recently elected as a town justice in Camillus.
John Petosa

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1 Comment

  1. Thanks for sharing these tips. Even if you’re confident that things will be paid in time, it never hurts to know exactly what would happen if the situation of late payment ever came up. Being prepared to take care of things when a problem comes up will definitely pay off, as opposed to not being prepared and having an issue come up seemingly out of nowhere.

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