On Tuesday nights at 8-9pm EDT we host a chat session on Twitter where small business owners can ask questions, share stories and make new contacts.

To follow the next chat go to Tweetgrid.com and follow along on Tuesdays. If you want to add to the conversation, you must have a Twitter user account.

For more details on the chat check out Where To Turn For Small Business Answers.

Here’s the recap:

Tuesday, March 17, 2009 • 8-9pm EDT • Hosted by @SternalPR and @SternalMrktg

Topic: Small Business Taxes

Specialist: Rick Lafave, Principal at H&R Block tax and business services

Ques #1: How do you know if you can do ur own taxes or if u need to have a prof. CPA do ur small biz taxes?

ricklafave: @SternalPR I may b a little biased :), the tax code has grown to over 3.7 Million words long and over 200 changes in 2008 alone #smbiz

ricklafave: @SternalPR so filing is pretty complex, especially for business owners; the main difference between doing it yourself and using a #smbiz

SternalPR: @ricklafave Do you find there to be a simple benchmark for deciding to do ur own taxes? #smbiz

ricklafave: A tax professional is into proactive tax planning. How to set up your business to take advantage of deductions #smbiz

ricklafave: @SternalPR If you have a simple return, no business, w-2, it is probably ok to file yourself using a software program #smbiz

ricklafave: @SternalPR with businesses it gets complex, starting with entity selection (llc, s-corp, partnership) and it requires planning #smbiz

SternalPR: @ricklafave Guess the complication comes in when ur trying to figure out what is a simple or not simple return. #smbiz

ricklafave: @SternalPR exactly, if you have a business you should probably hire a tax pro to help #smbiz

Additional Question:

SternalMrktg: @ricklafave What if your a sole proprietor? Can you do it yourself for that? #smbiz

ricklafave: @SternalMrktg you can do a schedule c as a sole prop yourself, but it can still be tricky knowing what is allowed to write off #smbiz

Ques #2: Can small biz expect any kind of tax relief with their filings this year?

ricklafave: @SternalPR yes, 1) businesses can use losses from 2008 to offset prior years going back up to 5 years, in other years it was only 2 #smbiz

ricklafave: @SternalPR this is a potential significant savings for a business owner; #smbiz

ricklafave: @SternalPR 2) Seciton 179 deductions are allowed up to $250k for depreciable assets, so sm biz can write 100% off in one year #smbiz

SternalPR: @ricklafave Do u have any examples of what could be deducted? #smbiz

ricklafave: @SternalPR PC’s, office furniture, printers, ect. #smbiz

SternalMrktg: @ricklafave So losses this year can offset profits from past years? How does that effect money paid out previously? #smbiz

ricklafave: @SternalMrktg In years past if you have a loss carried back, you can get a refund if you had to pay taxes by amending priors #smbiz

Ques #3: Are there any differences to keep in mind if u are a home-based business or an online one?

ricklafave: @SternalPR not really from an IRS perspective; you can write off a home office it has to be exclusive and regular; #smbiz

ricklafave: @SternalPR deductions will vary based on your business; online maybe more server space, home office could be more phone expenses #smbiz

SternalPR: @ricklafave If it is a home biz, can u deduct ur mortgage and electricity lol??? Actually a common question. #smbiz

ricklafave: @SternalPR you can deduct a % based on sq ft of the office space for mtg interest, utilities, house insurnace, real estate taxes #smbiz

DrFernKazlow: @ricklafave @SternalPR There are extra (dif) deductions that you incur home-based -esp if you see clients in your home; #smbiz

SternalMrktg: @ricklafave When you say “you can write off a home office it has to be exclusive and regular.” What does exclusive and regular mean? #smbiz

ricklafave: @SternalPR the important rule to keep in mind with a home office is that it has to be exclusive; no kids on the PC checking email #smbiz

ricklafave: @SternalMrktg you have to regularly use the home office; exclusive meaning that you only use it for your small business #smbiz

SternalPR: @ricklafave So if you have a room in the house where ur biz is all u use room 4, that is deductible? #smbiz

ricklafave: @SternalPR correct. You have to calculate the % of sq ft that the room is and use that to calc the % of utilities, interest, etc. #smbiz

Ques #4: Do u ever see a day when we file via Twitter, or do u see the IRS having a Twitter account to answer smbiz questions?

ricklafave: @SternalPR I hope the IRS gets a twitter account that would be great…don’t know about filing via twitter…taxes are pretty complex #smbiz

SternalMrktg: @ricklafave IRS on twitter would be cool! They could be like @ComcastCares. #smbiz

ricklafave: @SternalMrktg exactly; just like @comcastcares that would be great for a gov’t agency to be on twitter #smbiz

lynnpierce: @SternalPR does that mean we could file taxes in 144 char? #smbiz

SternalPR: @lynnpierce Not sure if that would be illegal for some lol!!! #smbiz

lynnpierce: @SternalPR sure would save me a lot of accounting fees #smbiz

SternalPR: @lynnpierce If we mess up can we simply tweet FAIL to the IRA lol??? #smbiz

ricklafave: @SternalPR yes, in fact if you do your return wrong that is what the irs does stamp #fail #smbiz

Participant Questions:

lynnpierce: @SternalPR I heard that if your self-directed IRA lost $ you can’t write off. True?

ricklafave: @lynnpierce no you cannot write off losses in an IRA self directed or otherwise #smbiz

SternalPR: @ricklafave Hey what’s a self-directed IRA? #smbiz

ricklafave: @SternalPR self directed allows for a greater choice of investments #smbiz

lynnpierce: @ricklafave anything to be done about IRA losses? #smbiz

lynnpierce: @SternalPR I was hoping for an answer that gave me cash back or at least a loss to carry forward #smbiz

SternalMrktg: @ricklafave please say yes. RT @lynnpierce: anything to be done about IRA losses? #smbiz

ricklafave: @lynnpierce from a tax perspective there is nothing to do to realize a loss in an ira #smbiz

papalotl: what category do Doulas file under? I’ve heard teacher/educator

ricklafave: @papalotl what is doulas? #smbiz

papalotl: @ricklafave that’s the issue, even the IRS doesn’t know what we are. A doula is a professional labor assistant. #smbiz

papalotl: @ricklafave assist pregnant moms in labor at the time of birth #smbiz

papalotl: @krisfrancisco welcome! Last week was my first time here, it’s great info #smbiz

krisfrancisco: @papalotl Thanks! Any chance to network with sb owners.. I’ll take it #smbiz

ricklafave: @papalotl so how do you file as a doula? Are you a contractor paid on a 1099 or do you get a w2? #smbiz

papalotl: @ricklafave neither, I am self-employed. I don’t work for a hospital and individual clients don’t 1099 me either #smbiz

ricklafave: @papalotl you would report income on a schedule C and reduce that income by expenses associated with conducting your business #smbiz

papalotl: right, but my question is under what category, or does it matter on a schedule c #smbiz

ricklafave: @papalotl are you asking about filing status? That is different, single, married, head of household, or married filing seperate #smbiz

papalotl: @ricklafave no, we file married. When self-employed I remember having to choose a category or industry, something like that. #smbiz

ricklafave: @papalotl yes, on the schedule C you have to pick your industry…no big deal, just pick something that is appropriate #smbiz

papalotl: @ricklafave ok, that’s what I figured, I’ve heard of other doulas using teacher/educator #smbiz

ricklafave: @papalotl it does not really matter what you choose, just pick the best one for what you do #smbiz

lynnpierce: @SternalPR my acct files extensions and I do them in the summer #smbiz

SternalPR: @lynnpierce Do you get penalized for filing extensions? Are there fees? #smbiz

lynnpierce: @SternalPR no penalties unless you underestimate your taxes #smbiz

ricklafave: @SternalPR @lynnpierce is correct; no penaty for extension as long as you file by extension deadline and pay the taxes owed #smbiz

Ques #5: Are there specific tax laws that always give small business more trouble than others? Advice to overcome?

ricklafave: @SternalPR question 12 - documentation is the biggest issue facting small business owners that are audited #smbiz

ricklafave: @SternalPR question 12 - you have to be able to support write offs to the IRS #smbiz

SternalPR: @ricklafave Any technology to help with the documentation - other than a spreadsheet lol??? #smbiz

ricklafave: @SternalPR It is always a good idea to keep the best records that you can. I recomend using a bookkeeping software #smbiz

ricklafave: @SternalPR the most popular by far is quickbooks…they own around 80% of the market #smbiz

SternalMrktg: I use Quickbooks from @Intuit, what does everyone else use? #smbiz

papalotl: I use Excel, it’s still a small enough business I can get away with that #smbiz

Ques #6: Just how horrible are the payroll taxes for a small business? Anything we can do to overcome this mess?

ricklafave: @SternalPR it is tough and depends on how you file. you can avoid FUTA & SUTA as an llc but S-corps have payroll issues #smbiz

ricklafave: @SternalPR overcoming payroll issues for a small business with a good amount of income, I recommend forming as an S-corp #smbiz

ricklafave: an S-corp owner can pay themselves a reasonable salary via payroll and pay the rest out as a disbursement saving over 15% #smbiz

Ques #7: What are some great all around Web resources or blogs that help smbiz with filing taxes?

ricklafave: @SternalPR the best web resource is www.irs.gov select the business tab and there is a wealth of info available #smbiz

connectingwomen: @SternalPR SCORE and even the IRS website has lots of sources #smbiz

ricklafave: @connectingwomen @sternalpr score is a great resource for all aspects of small business; retired professionals that help #smbiz
SternalPR: If anyone has any other questions for @ricklafave go ahead and reply to him. He’s a wealth of knowledge for taxes. #smbiz

Next Weeks Topic:
Promoting Your Product Online and Affiliate Marketing