Small business owners are finding outside help during tax season
April 14, 2014 11:48 PM
By Anya Sostek / Pittsburgh Post-Gazette
To tell the tale of taxes and misery, Tim Tobitsch describes an evening roughly eight years ago at the Brillobox bar in Lawrenceville. He had complained to Megan Lindsey, his co-owner at a Downtown hot dog shop, about the trouble he was having completing the company's federal tax return.
Ms. Lindsey offered to help him, but after several hours at the bar, watching numbers swim in front of her, she became despondent, instead doodling a large heart on the tax return with tears spilling out of it.
In most of the years since, Mr. Tobitsch’s tax pursuits have been on his own. For reasons part philosophical, part practical, he was determined to be one of a small fraction of business owners who do their taxes without an accountant.
“It was not something I ever wanted to do,” he said, sitting at a table at his restaurant Franktuary’s location in Lawrenceville. “But you just don’t have the capital to pay everyone to do everything you want.”
A report released Thursday by the National Small Business Association found that 86 percent of small business owners surveyed hire a tax practitioner or accountant. The group found that 9 percent used computerized tax software or had an employee do the company taxes, leaving a tiny percentage who do the taxes themselves.
“The overwhelming majority are outsourcing,” said Molly Day, spokeswoman for the National Small Business Association. “What we’re hearing from our members is that it’s wildly complex.”
In Franktuary's first years, the owners simply couldn’t afford $300 for an accountant, said Mr. Tobitsch. So he decided to figure it out himself.
A table at the Franktuary restaurant in Lawrenceville — the business expanded from its first location in a Downtown church basement to also include the full-service Lawrenceville restaurant and a food truck — held folders brimming with receipts, notes, letters and tax forms as Mr. Tobitsch worked.
He still uses a chart that he developed labeled “TAXES ARE DUE!” with forms such as WT-1, City NP-5 and EM-1 scattered through the calendar. Sales taxes are due every month, with some months requiring much more. The month of January, for example, requires nine forms to be submitted in addition to sales taxes.
He laughs describing some of the more byzantine regulations and procedures — including his nemesis, the city’s local services tax form.
The form specifies that information on each employee must be submitted through either a CD or diskette. “Who uses the term ‘diskette,’ anyway?” he said. “Saying you have to have a floppy disk is just adding insult to injury.”
There is an exception for businesses with fewer than 20 employees, which included Franktuary before the Lawrenceville location opened.
Under the exception, he could send in his Excel spreadsheet on a city-provided template, with a button on the template that converted it into an ASCII file. The only problem: “Every year when I hit the button, nothing happened.”
So year after year, he submitted a print-out of the form, with a note on the bottom noting that he was sorry and that he tried the button several times. It always seemed to work.
He cautions that this route isn’t for everyone. A former SAT tutor, he’s always had an affinity toward forms and standardized tests. His father, who taught him to do his own taxes at age 18, currently volunteers helping elderly people in New York complete their tax forms.
Mr. Tobitsch said he has seen other restaurants attempt to do their own taxes and “it hasn’t ended well. It becomes an impossible [task] if you don’t stay on top of the paperwork during the year.”
Which isn’t to say that he’s done everything perfectly.
He pulls several letters out of his folders detailing fines that he’s had to pay because he didn’t know that he had to complete forms or filled them out incorrectly.
One fine, for example, came because he didn’t realize that he had to fill out a state corporation tax form, because Franktuary isn’t a corporation. He only found out the form was due when he was sent a letter fining him — even though he wouldn’t have owed any money had he known to complete it.
Still, he’s paid much less in fines than he would have to an accountant over the years, he said.
But more to the point, Mr. Tobitsch believes there’s value to doing his own taxes — both for himself and as a matter of principle. He thinks he understands his business better because he’s done his own taxes.
And there’s also a larger picture.
“I don’t think it’s reasonable for a government to tax its citizens in a way that leaves a person of average intelligence and free time unable to make payments on his own,” he said. “A person should be able to file his or her own taxes.”
The National Small Business Association survey found that its members actually felt that taxes posed a bigger administrative burden than a financial burden.
And it was that administrative burden that finally broke Mr. Tobitsch.
The Franktuary location in Lawrenceville has dozens more employees than the Downtown location, and when it opened last year he realized that the sheer time required in doing his own taxes would get in the way of running the business. At this point, he’d rather be doing other things — helping the restaurant make its own sausage, for one — than doing taxes.
So he hired an accountant.
And for the first time this year, he used an accountant for the Downtown location as well.
“I no longer have the time to be able to do all the taxes on my own; however, I do have a solid understanding of what my accountant does, thanks to my past experience with my business' taxes,” he said. “That said, I do like my accountant.”
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