Don't Let Tax Compliance Issues Burden Your Boutique Business
With a more focused and flexible service operation, boutique businesses provide a nice change of pace for customers seeking a more niche experience compared to their larger counterparts. Although boutique businesses are a welcome addition in the marketplace, they are not without their challenges. Karen Stern, Partner in Charge of Brown Smith Wallace Entrepreneurial Services Group, discusses the tax compliance issues boutique businesses may encounter, in this month’s “Financial Fitness” column, as featured in Small Business Monthly.
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 could face your business, contact Pam Huelsman, Principal, State and Local Tax Services at Brown Smith Wallace, at firstname.lastname@example.org or 314.983.1392.