During political campaign season, it’s very common to hear politicians on both ends of the spectrum talk about their support for small business. I used to be satisfied by these statements, but now that I run a business of my own, I have to say I’m surprised by the investment of time and/or money required for licensing and taxes.
If you think your personal tax returns are complicated, get ready for some fun when you have your own business. First, you have to figure out the appropriate registrations (Washington Secretary of State, Washington State Department of Revenue, City of Seattle, Federal EIN, etc). The overall process is poorly documented, and individual resources are disconnected. Then you have to keep track of all the various deadlines and paperwork that occur throughout the year, especially federal deadlines like paying personal estimated quarterly taxes and returns. For a small business with enough resources for professional financial support, this is just part of doing business. But a new small business probably doesn’t have these resources, or could benefit a lot from investing them elsewhere, and all the paperwork becomes a huge distraction. While it’s completely understandable why these requirements exist, I cringe every time I finish a form that says I owe $0.
If we want to see more small business, there should be a focus on supporting new small business. We should be helping new entrepreneurs dedicate their time and limited resources where it is needed the most: on establishing and growing their business. When they’re spending days navigating a system that ultimately results in a $0 bill, it’s a waste of everyone’s time and resources, including the government’s efforts to collect nothing.
To all my fellow entrepreneurs, I hope you get all your 2010 tax requirements swiftly, and get back to business.