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Starting a Small Business in O'Fallon: Dealing with Business Taxes

"O'Fallon Patch" rounds up tips and resources on how to deal with small business taxes.

Welcome back to our series on .

This week, we're offering tips and resources for handling your taxes as a small business owner. Last week’s experts, and , are back with more tips for potential small business owners.

Advice from the Experts

Shoaf said his number one piece of advice for small business owners is to find and hold on to a good tax professional.

“We always document everything, limit our tax liability within what the law allows and never take any questionable deductions,” Shoaf said of his own businesses. “Be cautious of unique directives on certain classes of businesses.”

He said that most of a new business owner’s tax questions have probably already been asked and answered in formal letters and responses.

For example, when Shoaf wanted to know if he should charge sales tax on photography for his company, he found that the question was answered in detail.

“We researched it and found that ‘LR3714’ Photography Services, Photographs and Labor (dated April 4th, 2007) answers the question," he said. "This helped us at Richard Shoaf Photography to charge the appropriate taxes on our products and not over charge our clients.”

Coleman said he has his CPA handle all of his business taxes, and he recommends the same for his clients.

“The tax laws change from year to year,” he said. “It is virtually impossible to run a business and stay up to date on all the changes.”

He added that delegating tax filing to an experienced CPA is almost essential to significantly grow a business year after year. 

“My CPA keeps me in the loop on all the advantages I have or deductions I can take,” Coleman said.

Small Business Taxes Fast Facts

Still confused? Don’t worry. You can take a free virtual workshop on the IRS website called Small Business/Self-Employed Virtual Small Business Tax Workshop. Find more resources for tax help at the SBA’s blog.

Tax Information

The city’s finance department offers a breakdown of real and personal property taxes for the city itself, as well as all potential taxing jurisdictions on its website.

Avoid Common Mistakes

New small business owners often make similar mistakes when dealing with their taxes. You can avoid them with a little preparation.

  • Save all receipts, even those for less than $75, if you’re planning to claim the expenses as tax deductions. Even though the IRS doesn’t require an actual receipt for expenses under $75, if you’re audited, you’ll need to provide some sort of record.
  • Keep expenses for supplies separate from equipment costs. Though there are special rules that might allow you to write off capital expenditures for your personal property, including things such as office furniture, fax machines and computers, you will need to use a special method of expensing the costs. If you don’t report the expenses properly, the IRS might decide that you didn’t characterize the deduction properly and rule that you’re not entitled to it. You might also be required to add the cost of the property to your overall business investment.
  • Keep careful records of all reimbursable expenses, even when you pay for them out personally. They can still be used as deductions on your business taxes.
  • Know how to calculate automobile deductions—it’s a detailed concept. Learn more at TaxAlmanac.com.  
  • Be careful with business gifts and deductions. The IRS only allows you to deduct up to $25 in gifts each year for any given individual. You are welcome to give more expensive gifts, but only the first $25 each year per individual is actually deductible.
  • Check out the SBA’s guide for small business expenses and tax deductions for more information.

In Case You Missed It

In case you’ve missed previous editions of , we have shared ideas for choosing a business concept, including the and .

We’ve also discussed , given tips and ideas on ways to and offered expert advice on . We offered information and resources on and last week, we covered the .

About the Experts

owns several locally-based businesses, including and .

Chris Coleman owns St. Louis-based FranNet, a company that helps would-be business owners choose and develop franchise businesses. FranNet's clients include several O’Fallon area business owners, Coleman said.

Have you always dreamed of starting your own business? Subscribe to our daily newsletter so you won’t miss a single part of this ongoing series! Next week, we’ll offer tips and resources for handling your taxes as a small business owner.

Do you own your own business in O’Fallon? We want to share your story with the community! Contact Patch reporter Angela Atkinson at angela.atkinson@patch.com to arrange for an interview.

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