Jimmie Wilkins

Consider these three simple areas that can make a tremendous difference in your tax liability exposure.

Failure to keep books.

If you do things correctly, your bookkeeping records will clearly reflect the earnings and expenses of your business. This makes for easy and accurate tax preparation as well as appropriate support in the event of a tax audit.

If this isn’t motive enough, think about this. In the case of an IRS audit, if your business does not have adequate financial records, they are in their right to “approximate” your income based on industry standards and are under no obligation to assume any legitimate expenses to offset your revenue — thus all profit, all taxable.

If you don’t know how to keep records for your business, go to the IRS Web site for small business recordkeeping publications. You can outsource your recordkeeping to a bookkeeping service or take a class and learn how to manage the financial records of your business. There is no time like the present.

Falling behind on tax payments.

Self-employed individuals do not have the benefit of someone else being responsible for tax withholdings. You are your employer.

As an employee, your employer makes these “deposits” for you. Each pay period, taxes are taken from you check and remitted by your employer, including their portion.

As both the employer and the employee (so to speak), you make these deposits. Estimated payments are required to be calculated and paid four times a year. Failure to make these deposits is subject to fines and interest.

Mixing personal and business funds.

Failure to separate business and personal funds can draw extreme scrutiny upon IRS examination (if you are one of the chosen ones for an audit).

In fact, in the case of a corporation, a commingling of personal and business funds can allow the IRS to “pierce the corporate veil” which, in essence, removes all protection of a corporation.

It makes sense to separate them out but I am still amazed at the number of people who keep one checking account and think they will/can keep track and separate the two tracks.

Set up two separate and distinct accounts. If you need personal money for the business or business money to pay personal expenses, make a loan and leave a paper audit trail. Keep them separate, including credit card purchases.

Jimmie Wilkins is the director of the Chemeketa Small Business Development Center. The Small-Business Adviser column is produced by the center. Questions can be faxed to (503) 581-6017, e-mailed to This e-mail address is being protected from spam bots, you need JavaScript enabled to view it or phoned in to (503) 399-5088.

WWW.Census.gov is the most comprehensive site for demographics. Almost all of the pay services for demographics use census information that is open to the public on their website, www.census.gov/. It would be beneficial for any and all business counselors to learn the site and learn it well. Their American Factfinder page is an amazing tool that can give you demographics from the national level all the way down to an individual zip code and most everything in between. Today they released the latest in a series of Demographic profiles of older workers in individual states. This release is for Oregon click the links at the bottom of this post to view the pdf and to see a list of all the states that they have completed so far.

FOR IMMEDIATE RELEASE TUESDAY, SEPT. 23, 2008

Profiles of Older Workers: 2004 — Oregon — The Census Bureau, in partnership with 31 states, has launched a series of reports on workers 55 and older. The New Mexico report is expected to be released in late September. Previously released reports are available at http://lehd.did.census.gov/led/library/profiles_2007.html http://www.census.gov/prod/2008pubs/ledow04or.pdf.