Current Event: Accounting
Many entrepreneurs and owners of small businesses downplay the importance of taxes, to their detriment according to Hershey. Although not nearly as exciting or creative as the rest of small business development, proper accounting can help managers save money and avoid costly penalties. Taxes and the accounting activities that promote good tax reports are essential to the survival of any business. Without proper accounting know-how, business owners may neglect to claim valuable deductions or create incorrect totals even when using accounting software. Business owners should consider hiring trained accountants at least so their taxes are in order.
The entrepreneurial spirit is built into the American dream. Moreover, the number of new small businesses has increased recently as an aging baby boomer population seeks new ways to secure income after retirement. Before small businesses get off their feet, Hershey advises that owners pay close attention to how their business can and should be structured for tax purposes. Sole proprietorships, partnerships, and incorporated businesses are each taxed differently. Accountants also take into consideration personal tax returns to advise entrepreneurs on the best ways to save money, plan for the future of their business, and structure their firms.
In addition to appeasing the Internal Revenue Service, state-level taxation issues need to be taken into account and sometimes only certified accountants can help entrepreneurs work with the complex regulations that vary from state to state. Entrepreneurs may also need to consider hiring lawyers and insurance specialists, depending on the nature and size of their enterprise. New business owners may make many costly mistakes when trying to cut corners: such as underreporting their personal salaries or not remitting employee withholding taxes. Learning how to navigate through the maze of tax laws can be alleviated by professional support. Not all business owners know what they can deduct, whether to lease or own their equipment, and how to scale their income.
Works Cited
Hershey, Robert D. "For Entrepreneurs, a Crash Course in Accounting." New York Times. Feb 1, 2007. Retrieved Mar 26, 2007 at http://www.nytimes.com/2007/02/11/business/yourtaxes/11small.html?pagewanted=1&ei=5070&en=da2d0c4483eebbc9&ex=1175054400
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