Article posted from WSJ.com —
To save money last year, Anthony Fasano tried preparing his new business’s first tax return on his own. Then reality sank in.
“I realized I really had no understanding of the tax laws from a business standpoint,” says Mr. Fasano, founder of Powerful Purpose Associates, an executive-coaching company he runs out of his home in Ridgewood, N.J. “I was just winging it.”
Mr. Fasano started the business in 2009 as a side project while working for an engineering firm. But when his wife got laid off from a government job last year, he turned it into a full-time endeavor, sensing it would prove more lucrative for his family.
After spending roughly 20 hours trying to figure out the returns, Mr. Fasano ended up paying $500 to have an accountant finish the job, at which point he learned that he had overlooked the need to file 1099 forms for his four contract employees. “I didn’t know that had to be done at all,” says Mr. Fasano. “I should’ve gone to an accountant in the beginning.”
This tax season, entrepreneurs operating on a tight budget may be tempted to forgo professional help in preparing their companies’ returns. But experts say the investment is typically worthwhile — at least for those just starting out — to maximize deductions and avoid penalties. Tax specialists can help ensure that business owners don’t pay Uncle Sam too much or too little and help identify all the tax breaks they’re eligible to receive.
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