The Internal
Revenue Service today launched a campaign to help educate new self-employed small
business owners about federal tax responsibilities.
The
campaign kick-off coincides with the Small Business Administration’s annual Small
Business Week, April 21-25, which recognizes outstanding small business owners
for their contributions to the nation's economy and their personal achievements.
“One
of the biggest challenges faced by people starting out in business is understanding
and meeting their tax filing requirements,” said Kathy Petronchak, commissioner
of the IRS’s Small Business/Self-Employed operating division. “It’s a new, different
and potentially overwhelming experience for them. We want new small business owners
to know that the IRS has resources to help them learn about their federal tax
responsibilities and avoid common pitfalls.”
The campaign
will provide new Schedule
C, Profit or Loss from Business, filers with improved and updated educational
materials through a variety of channels, including IRS.gov,
small business workshops and other outreach events.
Schedule
C is filed by sole proprietors (one-owner businesses) as an attachment to their
Form 1040 individual income tax return. Self-employed individuals with less complex
situations – including business expenses of less than $5,000, no net losses and
no employees – may be able to file Schedule
C-EZ, Net Profit for Business.
About one in seven federal
income tax returns includes a Schedule C or Schedule C-EZ. Taxpayers filed over
21 million Schedules C for tax year 2006, reporting overall net profits from sole
proprietorships totaling more than $269 billion.
In this
introductory phase of the campaign, IRS is offering some basic tips to avoid potential
problems:
