Where To Start on Small-Business Taxes

NEW YORK (TheStreet) -- Tax time is here, and for a small-business owner just starting out, the thought of completing individual and, perhaps, business-specific tax filings could be daunting.

While most experts say the safest way for business owners to undergo the somewhat painful task of tax filing is to hire an accountant or use software applications such as Intuit's (INTU) TurboTax, there are a few things business owners can take care of on their own.

The self-employed still have time to lower their 2010 tax bill, says Tom Casey, a certified financial planner in Shelton, Conn. Here are three ways:

• Individuals with adjusted gross income below $27,500 (or married couples with income below $55,000) can contribute up to $2,000 to a retirement account and the government "will give you a dollar-for-dollar tax credit, as long as you owe $2,000 in taxes," Casey says. "That's something that a lot of people miss."
• The self-employed can also set up a SEP IRA (Simplified Employee Pension Individual Retirement Account).
• Regardless of whether they are business owners, everyone should also have Roth IRAs.

But businesses with gross revenue of more than $100,000 are more likely to get audited, and that's when the devil is in the details.

The most important thing for business owners is to keep diligent records, tax experts say.

Tax consultant Jim Kane of True Partners recommends that business owners get a business-specific credit card.

"My recommendation to everyone is to get a credit card to use for business expenses even if you pay it off every month," Kane says. "Use that card, because then the credit card company is basically maintaining the accounting records for you."

Business owners with employees must take their payroll taxes obligations seriously. Payroll taxes and sales tax are where small firms most often run into trouble, experts say.

"If you're collecting taxes on behalf of the government, don't use it to cover a cash flow shortage. Understand it's not your money. You're just holding it for the government," Kane says.

One of the most common mistakes newbie or, in some cases, cash-strapped business owners make is pay the federal government payroll and sales taxes late.

"If you're a day or two late in your federal income tax filings for payroll it can cost you 10%," says Michael Alter, president of SurePayroll, just acquired by Paychex (PAYX). "I would almost rather be in hock to a loan shark than to the federal government when it comes to payroll taxes."