A guide to books and Web sites that can help you take advantage of corporate-tax strategies and deductions. Resources include tips from the IRS and tax-filing mistakes to avoid.
It's that time again, when the end of the calendar year reminds you of all the corporate-tax strategies you meant to focus on: all those documents you knew you should have kept; the deductions you really wanted to plan for but never had the time to think about. Some of your options are dwindling: state tax authorities create at least as many difficulties for companies as the IRS does, if not more. And we've yet to find a published or electronic resource on the state-tax front that's worth recommending. But there is good news: on the federal tax front, there are plenty of useful resources to help you identify strategies that can still be implemented before the year's end. Just consult some of these resources. Each is rated on a scale ranging from five stars (we love it) to zero stars (we hate it).
Tax Savvy for Small Businesses: Year-Round Tax Strategies to Save You Money
(Nolo Press, 800-992-6656, $28.95), by Frederick W. Daily, a tax lawyer, is a completely invaluable guide, now in its third edition. Granted, this oversized paperback can seem a little overwhelming: it's crammed with information, all of it possibly relevant to the small-business owner. Unless you're a CPA at heart, we can't recommend that you try to read it from cover to cover. Instead, focus on two key chapters (chapter 1, "Business Income and Tax-Deductible Expenses," and chapter 3, "Recordkeeping and Accounting"); then keep this on your bookshelf for future reference. *****
www.irs.ustreas.gov/prod/bus_info/index.html is a site that even we at Inc. are shocked to recommend: type in this URL and you end up in the "Tax Info for Business" section of the IRS's official Web site. It's no secret that in the past the IRS was notoriously incompetent when it came to then-state-of-the-art advances such as telephone hot lines, but, hey, even the Tax Man deserves a second chance, and this site is pretty darn good. It's also free. Don't hesitate to browse around, but we do recommend "Frequently Asked Tax Questions," which includes accessible but comprehensive answers to questions such as, How does a start-up file W-2 forms? and How should one decide whether a person is an employee or an independent contractor? But don't feel you have to click every button: the "Meet the Commissioner" section may be going a bit too far. ****
Don't Let the IRS Destroy Your Small Business: 76 Mistakes to Avoid
(Perseus Books, 800-386-5656, $15), by tax lawyer Michael Savage, sounds like the kind of rant that's all too simple to find (and discard) on bookstore shelves. But here's a surprise: it's actually worth skimming all 174 pages of this guide to see which of the "76 Mistakes to Avoid" your company has been making, probably since day one. One good example: mistake number 31, "giving employees too large a discount" on company products or services, which can cause you to incur a tax liability if you breach IRS limits. ***
The Ernst & Young Tax Saver's Guide
(John Wiley & Sons, 212-850-6000, $11.95), edited by Peter W. Bernstein, is mainly a personal-finance guide, but "Tax Strategies for Businesses" (chapters 14 to 17), is top quality. Focus mainly on the "TaxSaver" and "TaxPlanner" tips liberally sprinkled throughout. Here's a good one: "Paying higher salaries to stockholders of C corporations, if such remuneration is reasonable, can avoid the double taxation of business income." ***
Taxes for Dummies: 1998 Edition
(IDG Books Worldwide, 800-762-2974, $14.99), by Eric Tyson and David J. Silverman, is the kind of book that only a dummy entrepreneur would buy: the information is probably too elementary for most small-business owners. It's packed with tax forms and tips, but there are fewer than 20 pages of information relevant to businesses, most just too basic to be of real use. Do you really need this book to tell you, "The IRS may audit you, and if they do, you'll be asked that dreaded question 'Can you prove it?" We hope not. *--Jill Andresky Fraser