Code Complexity is Taxing Small Businesses
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. CREDIT: Labyrinth image via Shutterstock |
The chances are good that you, like many other small-business owners or managers, will be burning the midnight oil to meet the April 17 deadline for filing your taxes. With the pain still fresh, it won’t come as a surprise to learn that the complexity of the tax code continues to pose significant challenges to small businesses. Unfortunately, that pain won’t go away anytime soon: the administrative and financial burden imposed on small businesses by federal taxes continues to grow, a new survey shows.
Although the actual out-of-pocket cost is a huge issue, the sheer complexity of the tax code, along with the mountains of paperwork that it necessitates, is a significant problem, according to a new small- business taxation survey conducted by National Small Business Association. Nearly two-thirds (64 percent) of small-business owners reported that they spend more than 40 hours a year dealing with federal taxes, up from 57 percent a year ago.
The financial burden is growing as well, with a slight increase in the number of small businesses spending in excess of $5,000 annually in accountant fees or internal costs on the administration of federal taxes along, the survey found. Underscoring the complexity of the federal tax code is the fact that 85 percent of small-business owners feel the need to pay an external tax practitioner or accountant to handle their taxes.
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When asked to rate the most significant challenge posed by the federal tax code to their business, the majority (46 percent) picked administrative burdens while 44 percent said financial burdens. When asked to rate specific small-business taxes in terms of both financial and administrative burden, the top cited by owners were payroll taxes, state and local taxes, property taxes, sales tax and income tax.
In terms of specific tax code provisions, small-business owners expressed the greatest concern over the pending increase in the marginal income tax rates, massive increases in the estate tax, prohibiting self-employed from fully deducting the cost of their health insurance and the expiration of the expanded Section 179 expensing and bonus depreciation.
Reach BusinessNewsDaily senior writer Ned Smith at nsmith@techmedianetwork.com. Follow him on Twitter @nedbsmith.