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Washington Watch
February 18, 2004
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Home-Business Study Reveals
Restrictive Regulation
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As the smallest micro-businesses, home-based firms
face restrictive regulations from both the federal and
local governments that do not take into account their
size, location, or realities of working out of a home,
concludes a new study by the Office of Advocacy of the
U.S. Small Business Administration. The study looks at
how federal and local laws disproportionately impact
the fifty-three percent of small businesses are run
out of a home office. |
“Most home-based business owners wear several hats
when it comes to their business, including sales,
marketing and accounting,” said Robert Hughes,
president of the NASE. “But complex and confusing
regulations hinder them from growth, and often leave
them guessing when it comes to the tax code or local
zoning laws.”
The home-office deduction is one regulation the
report, Home-Based Business and Government
Regulations, highlights as overly cumbersome. The
deduction is complex, the depreciation is spread over
an unrealistically long time, and returning the office
back to residential use usually entails penalties.
Another example entails local zoning codes that
include prohibitions, prescriptive requirements or
limits on various aspects of home-based businesses.
The report was released this week from the NASE
Washington, D.C., office, in a media conference call
with Hughes, Chief Counsel for Advocacy Thomas M.
Sullivan, and two NASE Members and home-based business
owners.
For more information, or to read the report, visit
www.sba.gov/advo.
IRS: Be on the Lookout for Abusive
Home-Based Business Tax Schemes
If you have a home-based business, the Internal Revenue
Service cautions against several tax avoidance schemes
making their rounds. Be wary of programs and promoters
selling the concept that taxpayers can operate any type of
unprofitable “business” out of their home and claim personal
expenses as business expenses.
The IRS offers the following examples of items generally NOT
deductible as a business expense.
Any promotion claiming these expenses should be considered
highly suspect:
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Deducting all or most of the cost and operation of a
personal residence. For example, placing a calendar, desk,
file cabinet, telephone, or some other business-related item
in each room does not increase the amount that can be
deducted.
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Paying children a salary (e.g. for answering telephones,
washing cars, etc.).
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Deducting education expenses from salaries paid to
children wrongfully claimed as employees.
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Deducting excessive car and truck expenses when the
vehicle was used for both personal and business use.
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Deducting personal furniture, home entertainment
equipment, children’s toys, etc.
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Deducting personal travel, meals, and entertainment under
the guise that everyone is a potential client.
For further information on tax avoidance schemes, visit the
IRS Criminal Investigation Web site.
If you have specific questions on a tax scheme or wish to
report a possible scheme, call 1-866-775-7474 or send an
e-mail to irs.tax.shelter.hotline@irs.gov.
Proposed Legislation Would Increase
Number of SBA Loans
New legislation introduced last week by House Small Business
Committee Chairman Don Manzullo (R-IL) would add at least $3
billion in lending authority to the U.S. Small Business
Administration’s 7(a) loan program this year. This would allow
the SBA to increase lending authority by more than 30 percent,
and provide thousands more micro loans to entrepreneurs.
SBA 7(a) loans were suspended for a week earlier this year in an
effort to deal with funding shortfalls. This bill aims to
restore the loan program to its full strength, as well as
provide for its continued success in the future.
For more information on the SBA 7(a) program, visit:
http://www.sba.gov/financing/index.html
Upcoming NWBC Events
Mark your calendars for these events sponsored by the
National Women’s
Business Council:
The monthly teleconference call features Mentor-Protégé
Programs in the Federal Government with moderator NWBC
member Claudia Laird. To join the call, Tuesday, February 24,
3:00 PM - 4:00 p.m. EST, dial 1-877-326-2337, and enter code
#3687613.
A live Web cast on mentoring, Passing on the Passion,
will take place Wednesday, March 3, 2:00 – 3:00 p.m. EST.
Besides discussion on the importance of mentoring to women-owned
businesses, the Web cast will introduce the NWBC's new mentoring
portal, a Web site with additional information and links to
mentoring programs. The Web cast can be viewed at
www.nwbc.gov.
Click here for
more information on either of these events.
Do any of these issues affect you? Visit the NASE Legislative
Action Center and “Tell Your
Micro-Business Story.” This will help the NASE understand -
on a personal level - how key legislative issues are affecting
your business and your bottom line.
For more information about any of the articles in
Washington Watch, contact Maureen Petron, NASE public
affairs manager, at (202) 466-2100 or
mpetron@nase.org.
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