Small Businesses Struggle as Tax Deadline Nears

Tax Day stress is upon us, as small businesses rush to deal with everything from the complex tax code and tax preparation costs to audit red flags.

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A new survey finds that taxes pose an increasing burden to small businesses.With the April 18 tax filing deadline looming, the National Small Business Association released its 2011 Small Business Taxation Survey, which looks at how federal taxes impact small businesses. The NSBA surveyed 300 of its members online during the last two weeks of March and found that the complexity of the tax code has been an increasing burden for small businesses, with 57 percent spending a full workweek each year dealing with their filing. Additionally, one-third of small-business owners said they are spending more than $10,000 to have an outside firm prepare their return.

Respondents ranked payroll taxes as the most burdensome taxes for their business, both financially and administratively. Only 44 percent of small businesses reported using an external payroll company, and for those that do, it didn't save them any time when it came to dealing with payroll taxes.

When it comes to claiming certain tax deductions as a small business, the survey uncovered some surprising results. The NSBA reported that only 47 percent of eligible small-business owners claim the home office deduction, primarily due to concerns it will "red-flag" their return for an audit.

Also, the majority of small businesses said they pay taxes on their business at the personal income level. Past data from the NSBA indicates that 83 percent of small businesses are set up as pass-through entities, with only 17 percent of small businesses paying their taxes through the corporate tax structure.

The NSBA, which advocates on behalf of the nation's entrepreneurs, said in its report that tax reform for small-business owners is one of the organization's top 10 priorities.

Tags: 2011 Small Business Taxation Survey, National Small Business Association, News, payroll taxes, small business deductions, small business tax code, small business tax filing, small business tax red flags

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