Why Small Business Owners need professional tax consultant?
NFIB (National Federation of Independent Business) — the largest small business association in the country — conducted a survey of small business owners on taxes and spending. The purpose of the survey is to find out how taxes impact the ability of small business owners in operating their businesses.
There are 12,500 respondents in the survey. All of them are NFIB members between mid-November and mid-December, 2012. Below are the results:
- Eighty-five percent of the NFIB members think Congress should revise or, at least, simplify the federal tax code in 2013. According to them, the current federal tax code is complex and has inconsistent tax preferences.
- Ninety-one percent of the NFIB members hire an expert tax-preparer to do their taxes. Also, fifty-five percent don’t believe that simplification will take place in tax revision. This only shows that the members have found tax code to be complex.
- The survey also led to the discovery of the thirty-four percent members who are making expenditures for the sake of protecting their heirs from the estate tax. And what’s more surprising is that there are another fifteen percent members planning to make the same expenditures.
- There are at least eighty-two percent members who purchased below $500,000 in depreciable business assets last 2012. This includes real property.
- At least thirty-six percent members admit that they calculated the Alternative Minimum Tax (AMT) in their last tax year. In addition, seventeen percent say that they paid it. Very interesting.
- The survey also led to a discovery that NFIB members only prefer a tax code with fewer preferences and lower rates.
- Tax preferences that the members usually support capping or eliminating in exchange for lower tax rates are the following: the tax exempt municipal bonds; the mortgage interest deduction; the production tax credit; the employer—provided health insurance exclusion; and the total deductions. Where applicable, one-third to one-fourth of the subjects selected their answer based on a provision’s cap size instead of the provision per se.
- NFIB members prefer retaining the deduction for local and state taxes paid. Surprisingly, even in exchange for lower tax rates, and also, the preference for capital gains.
- Eighty-one percent are in favor of a spending cut to tax increase ratio (at least 3 to 1) for the purpose of diminishing federal budget deficit. Thirty-six percent members, on the other hand, prefer reducing the federal budget deficit through spending cuts alone. And as expected, no members prefer additional tax increases than spending cuts.
- Seventy-one percent agree that the most significant outcome in tax restructuring is their taxes falling or rising. On the other hand, twenty percent disagree with it.