Small businesses are vital to the U.S. economy. They employ half of the country's private sector workforce, and contribute more than half of the nation's gross national product. Historically, small businesses created 65% of all new jobs over the past 15 years.
For the 2010 tax year (the most recent year for statistics), there were 23 million sole proprietorships in the United States. Nearly 1 in 6 Form 1040 filers had a sole proprietorship that year. Another 7.1 million filers reported income from partnerships and S corporations. And the numbers of small businesses are growing. The IRS predicts that by 2015, 43 million individual returns will include business income.
Small businesses fall under the purview of the Internal Revenue Service's (IRS) Small Business and Self-Employed Division (SB/SE). This division services approximately 57 million tax filers, including 9 million small businesses (partnerships and corporations with assets of $10 million or less) and more than 41 million of whom are full-time or partially self-employed. The SB/SE division accounts for about 40% of the total federal tax revenues collected. The goal of this IRS division is customer assistance to help small businesses comply with the tax laws.
Toward this end, the Small Business Administration (SBA) has teamed up with the IRS to provide small business owners with help on tax issues. A special ...