Small Business Owners Face Huge IRS Fines

When I read a story like this one in the Wall Street Journal, I get a little sick to my stomach. Small business owners who thought they were setting up pension plans for themselves and their employees are now being sacked with huge fines from the IRS. Huge, as in $1.2 million for one Houston business.

The IRS says these small business owners are operating tax shelters; the business owners claim they had no idea and that their CPAs, financial advisers and others helped set up the plan. Either way, paying the fines, even a portion of them, would pretty much destroy all of the small businesses in this article.

There are a couple lessons to be learned here, but the best one is probably to make sure your accountant, financial planners, lawyers and other advisers who help make important decisions about your business can be trusted. In the current issue of MyBusiness, we feature a few tips for finding a qualified tax preparer. The same tips apply, whether looking for a financial planner or lawyer. It might take a little more work upfront to find the right advisers, but the time will be well spent.