Complicated tax code forces small businesses to spend on professionals

Small- to medium-sized businesses often struggle to create sufficient cash flow to qualify for a bank loan. This has become a greater issue, as a complicated tax code has forced many small businesses to spend money on tax professionals. 

According to a survey conducted by the National Federation of Independent Business, more than 90 percent of small businesses have given up on attempting to comply with the complicated tax code on their own and have hired professional tax preparers. 

The biggest challenges these businesses face when it comes to the tax code include preferences being too inconsistent and continuous changes, which have impacted their ability to plan and increased the cost of compliance. 

To help thwart this issue, the majority of small businesses said simplifying the tax code should be a top priority for the government, which could allow them to save money. 

"By an overwhelming margin, small-business owners indicated that they prefer lower individual tax rates and a simpler tax code," said study author and NFIB senior research fellow William Dennis. "They see economic possibility in growing their businesses, not in growing government revenue through tax increases."

However, until these changes are made, many small businesses will continue to spend on professional tax preparers, reducing their available capital. 

With less capital, these companies could struggle to obtain financing from a bank. Should a bank turn them down, there are other types of lending available. 

Businesses with inventory looking for a loan can take advantage of inventory financing, which allows them to use their current product to obtain a revolving line of credit. Meanwhile, those that are attempting to fill an order larger than they usually handle could turn to purchase order financing. Both options are available through Crossroads Financial.