Ty Warner, Beanie Babies creator and chief executive of Westmont, Illinois-based Ty Inc., has been sentenced to two years of probation after pleading guilty to evading taxes on $24 million in income from 1996 to 2008. He will also pay a $53 million civil penalty and at least $16 million in back taxes. The 69-year-old, who hid millions in secret Swiss bank accounts, avoided a sentence of up to five years in prison.
Defense attorneys pointed to Warner's unhappy childhood and charity work in their argument for probation.
According to the Chicago Tribune, the federal charge alleges that in 2002, Warner earned more than $3.1 million through investments held in a UBS account but failed to tell his accountants or report the money on his tax form. He failed to pay $885,300 in taxes that year.
Warner may regret his decisions, but the sentencing offers a teaching moment for entrepreneurs. Small business owners are bombarded with tedious paperwork, especially when tax time rolls around. So how do you fulfill your tax obligations without suffering bouts of anxiety--or worse, failing to file an accurate return?
For starters, you should get a firm grasp of small business tax deductions, which can reduce your tax burden considerably. From there, learn how to write off your business's excess inventory and how to plan for tax breaks during tough times.
A savvy accountant can help, but it might be worthwhile to find someone with a Certified Professional Accountant accreditation, if not a tax attorney with a J.D. and a license to practice law.