Leader Q & A: Steve Feinberg, owner of Appletree Business Services
With six employees, the Long Island, N.Y. native distinguishes his business from places like H&R Block, who depend largely on walk-in, year-end tax business. Appletree works exclusively with small business owners.
Q: You say this is the worst tax season since you started in 1981?
A: It's shaping up to be, between the feds and the state. A good example that can hit home: I just did a tax return for a client, where she had made some improvements to her house that qualified for the Residential Energy Credit, a $200 credit. She's due for a $3,000 refund; without the $200 credit she'd be getting $2,800. Right now, she can not electronically file her tax return, because that form is currently not being accepted. If you say you needed the tax refund tomorrow, then I guess you need to forego this $200 credit, and maybe amend your return later, and then you're going to pay umpteen hundreds of dollars to get somebody to amend it for you.
Q: And it's just as bad at the state level as it as at the federal level?
A: We're not quite sure what the problem is. The state of New Hampshire only (two weeks ago) released the income tax forms that anybody would use to file for 2012. Usually they come out Jan. 1.
Q: What's going on with the state?
A: Starting in 2011, the state changed all the forms, big time, with the idea ultimately of doing electronic filing, ultimately doing scanning of the forms, etcetera. We're only speculating that the reason this is taking so long is maybe that they're trying to get it better in year two. Last year we got it sooner than this, we didn't have this problem.
Q: How will recent changes stemming from the Affordable Care Act affect the tax liability of a small business owner this year?
A: Small employers paying at least 50 percent of the cost of health-care coverage and have less than 25 full-time employees with average wages less than $50,000, could qualify for tax break. After 2013, all bets are off.
Q: In general, how is a small business owner's tax liability and filing process different from that of a salaried worker?
A: That's going to depend on how they get taxed. Are they a sole proprietor, an S corporation, or a C corporation? Sole proprietors have to keep track of their income and expenses and file a Schedule C with their 1040 tax return. The bottom line is income for income tax purposes. On top of that, self-employment taxes must also be paid with the 1040. As an S or C corporation, the owners must be an employee of the business, and get a W-2. The corporation must file it's own tax return.
Q: Why come to a place like Appletree rather than using TurboTax or a similar product?
A: For individuals, it's providing continuity from year to year. Taxes get more and more complex. For businesses, we help small business owners with a disciplined approach, so they understand where their business is now, giving them the confidence to know where their business is going, and helping them know what their business, tax and payroll situations look like in the big picture.
This way, they'll have confidence with regard to their cash-flow, how much tax they might owe quarterly or at year end, whether they can make a capital investment, understanding payroll, hitting sales goals, knowing if they are pricing their products or services right, even knowing how much is in their bank account.