A recent bill in the U.S. Senate could help new small businesses save money on taxes.
The bill, called the Small Business Election Simplification Act, would extend an Internal Revenue Service deadline for new small businesses to classify themselves in a filing category — as an “S-Corporation” — that could save them money.
Small businesses are now required to turn in the classification form one year in advance of the regular tax deadline. The bill aims to change that deadline to match the regular tax deadline each year.
The legislation was introduced by U.S. Sens. Al Franken, D-Minn., Olympia J. Snowe, R-Maine, and Mike Enzi, R-Wyo. Passing the bill would “make it easier and more straightforward for entrepreneurs in Minnesota to start businesses,” according to Franken. The change could save business owners money that they could use to grow or create jobs, he added.
“Small businesses are the engine of our economy and are huge job creators, so we need to make sure that they can get off the ground without having to worry about the burden of unnecessary IRS rules,” Franken said.
According to a media release, many first-time business owners are unaware of the deadline for the classification form — called an “election form” — and therefore miss it. These businesses currently have the option of waiting another year for the process, or paying to file their election form late.
In 2009, nearly 100,000 entrepreneurs and small business owners across the nation missed the deadline, according to information from Franken’s office.
