The IRS estimates that it gets shorted $290 billion by taxpayers each year. Guess who the agency most wants to pay up? Small businesses and the self-employed. The IRS attributes nearly 40 percent of its "tax gap" to underreported taxes owed by these groups.
In the proposed 2008 budget, the IRS has asked Congress for $73.2 million in new funding to beef up tax enforcement within the small business/self-employed sector. So now's the time to make sure you're paying all the taxes you owe.
Make sure you're correctly reporting employee income on W-2 forms and paying payroll and other taxes, says Alice Magos, author of the online small-business advice column "Ask Alice". If you use independent contractors, be sure to send them correct 1099 forms, and don't misclassify employees as independent contractors. If you're not sure which category your workers belong in, find out at www.irs.gov, or call a tax professional.
For more information on small-business tax issues like these, Magos' company, Toolkit Media Group, offers the Business Owner's Toolkit at its website. You can also learn about relevant federal tax laws by signing up for the IRS' e-News for Small Business newsletter at www.irs.gov/businesses/small.
Seattlewriter Carol Tice reports on business and finance for The Seattle Times, Seattle Magazine and other leading publications.
The author is an Entrepreneur contributor. The opinions expressed are those of the writer.