As the old expression goes, “There is nothing more certain than death and taxes.” Of course, taxes play an important role in our civil society. But regulations and tax payments can be a big burden on small businesses. Hence, Missouri tax reforms are taking a step forward to relieve small businesses and help preserve their future.
The Importance of Tax Laws
It is important for small business owners to understand federal, state, and local tax laws and requirements so that the right payments are made on time. Tax laws provide the necessary legal structures for tax payments. They protect businesses and taxpayers. They help reduce errors in filing taxes because the laws and regulations define what is taxed, how it is taxed, and the amount of tax payments that are due. And they provide a sense of security because the amount of payments and tax payment timing are defined.
Missouri Tax Reforms Are Increasing Appeal for Small Businesses
According to the Tax Foundation, thirteen U.S. states enacted reductions in taxes in 2021, and more states, including Missouri, are working on tax reform bills in 2022. This activity is producing country-wide tax competition for businesses, so it is important for Missouri to take steps to stand out competitively to make businesses stronger in-state and to attract new business from out-of-state. Lower corporate income tax rates can help promote economic growth in the state which can expand the overall tax base.
Senate Bill 739 creates an updated tax trigger system that can continue to lower the individual tax rate based on the trigger system already in place. Senate Bill 701, if enacted would eliminate the corporate income tax effective in 2023.
Missouri already offers especially attractive tax rates to specific business types including data centers, labor-intensive manufacturing operations, shared service centers, and new technology centers. New Missouri tax reforms will enhance the state’s position in appealing to businesses in the region.
Impact of Taxes on Small Businesses
According to an NFIB 2021 tax survey, 77 percent of small business owners felt that federal business income taxes were burdensome. They also indicated that they felt the “pinch” of state and local income taxes and payroll taxes. In addition, they indicated their concern about the administrative burden of taxes.
Of course, taxes reduce profits for all businesses, and small businesses typically use profits as a primary source of financing, as well as paying for capital investments, expansion opportunities, and even for wages. Thus, changes being planned and evaluated in Missouri tax reforms can be very beneficial.
Tax Compliance Tips
To help achieve the best outcomes, a small business owner should:
- Choose the correct legal structure for the business.
- Make sure that taxes are paid at the right time. Not paying taxes at the proper due dates can lead to expensive penalties.
- Keep complete, accurate, and timely documentation.
- Know how employees and vendors can affect taxes.
- Seek expert advice. Working with a professional CPA firm can result in being on top of changing tax laws, reducing stress, and producing better tax payment results.
What Can a Professional CPA Firm Do?
A professional CPA firm can provide:
- Tax planning advice and tax filing services.
- Tax and financial compliance.
- Consulting regarding many financial decisions.
- Payroll and bookkeeping services.
Choose An Expert Accounting and Bookkeeping Company
Contact Doerhoff & Associates CPA, Based in Jefferson City, MO. Let us take care of the numbers. Our bookkeeping, payroll, tax preparation, and accounting services can save you time so you can focus on your business.