Today is the Internal Revenue Service’s (IRS) tax filing deadline and if you have not filed your taxes yet, you have until the end of the day to either do so or file an extension in most states. Taxpayers in Alabama, Florida, Georgia, North Carolina, South Carolina, several counties in Tennessee and Virginia, Juneau, Alaska, and Chaves County, New Mexico, have until May 1 to file for 2024. In addition, individuals impacted by wildfires in Los Angeles County, California, have until October 15, while taxpayers in Kentucky and a number of West Virginia counties need to file by November 3. If you need any additional information, the IRS also offers a help center.
For small business owners, filing taxes can bring an additional set of challenges given the complexity of our current tax code. Here are three facts about small businesses you may or may not know.
1. Small Businesses Drive the Economy and Much Tax Revenue
Main Streets across America form the backbone of our country’s economy. According to the Small Business Administration, small businesses represent 99.9% of all U.S. firms, employ 45.9% of all private sector workers, contribute 43.5% of the GDP, and generate 39% of the private sector’s payroll.
“The entrepreneurial spirit in America remains strong, with nearly 20 million new business applications filed since 2021—a historic surge in new business formation,” said Anne Zimmerman, President & CEO of Zimmerman & Co CPAs, Inc., an accounting firm in Ohio and Co-chair of Small Business for America’s Future, at a joint U.S. House and Senate Committee hearing on tax. “These new entrepreneurs represent a tremendous opportunity for economic growth and job creation, but only if they receive the proper support to survive their crucial early years and thrive beyond them.”
2. Small Business Owners Need Up Front Tax Relief
The early years of a small business are critical to its success and growth and are also a period where cashflow may be even more limited. Because of this, it is not surprising that when given a list of potential tax policies that could benefit them, surveyed small business owners rated the most helpful one to be exempting the first $25,000 of small business profit from federal income tax.
“This policy would particularly benefit early-stage and smaller businesses, allowing them to reinvest more capital into growth,” said Zimmerman.
3. Small Business Owners Want a Simplified Tax Code
That same survey found that small business owners want the process of filing taxes to be easier for them. For example, 27% of business owners said that simplifying the tax code and reducing compliance burdens would be most helpful to them, while the top choice for another 17% was creating one standard small business deduction.
“Unlike large corporations with dedicated finance departments, small business owners often navigate tax compliance alone or at significant expense,” said Zimmerman.” Simplification would allow entrepreneurs to focus on innovation and growth rather than paperwork.”
For better or worse, tax season can be a point of reflection for individuals and business owners. As elected leaders make decisions about the tax code, it is critical that they consider meaningful reform that will help America’s small businesses navigate the current economic environment while positioning them for future growth.
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