Don't Let Tax Compliance Issues Burden Your Business

by Karen Stern

With a more focused and flexible service operation, boutique businesses provide a nice change of pace for customers seeking a more niche experience than that offered by the businesses’ larger counterparts. Although boutique businesses are a welcome addition in the marketplace, they are not without their challenges.

The Internal Revenue Service (IRS) estimates that businesses with less than $1 million in revenue bear almost two-thirds of business compliance costs. Those costs are much larger, relative to revenues or assets, for these smaller companies than for bigger ones. Navigating the tax system is complex, and it’s no surprise that boutique-business owners are more likely to fall victim to tax compliance issues, such as underpaying taxes. Since most boutique businesses deal in cash, there is a higher burden on such businesses to have good record-keeping procedures to ensure that they do not overlook revenues or misrepresent expenses. The result of misreporting such transactions to the IRS or the state is higher compliance costs.

In addition to tax compliance, boutique-business owners should be aware of the proper certification and licensing requirements, such as state sales tax permit(s) or business registrations that may need to be displayed on site. Noncompliance with such requirements could result in fines or penalties.

To learn more about potential tax compliance hurdles that your business could face, contact Pam Huelsman, principal, state and local tax services, at Brown Smith Wallace, at phuelsman@bswllc.com or 314-983-1392.

For more information on how a bookkeeper or CPA can help your business, contact Karen Stern, partner in charge, Entrepreneurial Services Group, at 314-983-1204 or kstern@bswllc.com.

Karen Stern, CPA, (kstern@bswllc.com), partner in charge, Brown Smith Wallace Entrepreneurial Services Group, provides tax and accounting services for companies ranging from start-ups to $20 million in revenue.