Tax Tips: Ensure Your Business Taxes Are Perfect

With April 15 just around the corner, millions of Americans are rushing to complete their tax returns. But mistakes are easy to make. Ted Shalek, CFO of Smart Online, developers of OneBiz® suite of web based small business applications, offers a few tips on how to successfully tackle taxes:

1. Keep track of your tax information

In order to get the best results and save time and money, pay attention to all details. Have all the necessary information organized and handy. This will be important in the future too, should you be one of the taxpayers selected for audit by the IRS.

2. Start early

Complete the return and then closely review it and compare it to previous years’. Check for similar items and recent sources of income or deductions from one year to the next.

3. Deduction and Credits

Pay attention to all tax changes that have taken place this year. There are new deductions and credits available such as housing, energy, and contributions made to Haiti relief funds in 2010. Don’t miss all of the benefits legally available to you under the current tax laws.

4. If you owe and don’t have all of the funds to pay:

a. You must file the return or at least obtain a proper extension with IRS form 4868 electronically or through the US Postal Service. You should pay as much of the tax liability as possible since the IRS assesses penalties for late filing and late payments and charges interest at high rates.

b. If you cannot pay the entire amount of the tax obligation, consider borrowing the funds but compare the interest rate charged by your lender with the IRS prevailing interest rates. The current IRS annual interest rate on underpayment of taxes is 4 percent. In addition, the IRS will assess an underpayment penalty of 5 percent for each month that you do not pay the liability. Remember this is a loan and the IRS will pursue you until your debt is paid.

5. Avoid penalties and fines

It’s crucial to file your taxes, even if you can’t pay them. Avoid having the IRS assess the Failure to File Penalty, which is 5 percent per month with a maximum of 25 percent of the unpaid tax on the unfiled return.

About Smart Online

Smart Online, Inc. (OTCBB: SOLN) is a Research Triangle Park, NC-based designer and developer of web-based software applications for commercial and nonprofit organizations in a variety of industries. In addition to custom design and development, we focus on three core businesses: OneBiz® software for small businesses to efficiently manage and grow their business, Loyalty Clicks™ software for the nonprofit organizations community, and imart™ services specializing in design and applications for direct sales organizations (DSO). To learn more, please visit www.smartonline.com.