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NSBA survey: Taxes adversely affect small business

The complexity and inconsistency with the tax code are depleting small businesses of their time and money merely so they can handle the administration of federal taxes, according to the 2011Small Business Taxation Survey released by the National Small Business Association (NSBA), a small business advocacy group.

Respondents of the survey were all small business owners, with 34% having six to 19 employees on staff.  Thirty-nine percent were S-corporations, with 28% falling into the professional services category.

Highlights of the survey

• Significant challenges: Economic uncertainty (66%), decline in customer spending (39%); cost of health insurance benefits (35%).

• Time spent on federal taxes, such as calculating payroll, self-emp0loyment or any other business-related tax, filing reports, working with an accountant, estate planning, and similar activities): More than 40 hours (57%); more than 80 hours (38%).

• How taxes are prepared: Tax practitioner/accountant (87%); tax software on computer (4%).

• Ranking of administrative burden of taxes: 1. Payroll taxes; 2. State and local tax compliance; 3. Property taxes; 4. Income taxes.

• Ranking of financial burden of taxes: 1. Payroll taxes; 2. State and local tax compliance; 3. Property taxes; 4. Income taxes.

• Top 3 deductions or credits: Home mortgage interest deduction (54%); Sec. 179 expensing (47%); 2010 self-employment tax deduction for healthcare (37%).

• Use of payroll services: Yes (44%); no (56%).

• Utilization of home-office deduction: No (72%); yes (28%). Main reason for not taking home-office deduction was a concern about being red-flagged by IRS and audited (58%).

Please click here to view the full survey


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