jonjk said: i think that most small businesses do, in fact, pay their taxes.
Ah yes Rusty, he also pays taxes but not before creaming off £20/30k annually. A previous post suggested small businesses ploughed back profit into the business. He did, tripling his stock in the first year. Don't forget they're not just cheating on income tax but also VAT which I might add you and me are paying for
to go into his pocket rather than the governments.
here in the states we don't have a value added tax, and it's highly unusual for a small business to be so prosperous that he can actually afford to actively conceal income from the government - it takes money to hire people who know how to hide money.
here, most small business income is taxed directly to the owner as if it was his own income. so if you're not paying your business taxes, you're not paying your personal taxes. i would suspect that upwards of 99 percent of people, excluding contract laborers, pay their taxes in good faith.
the irs recently started requiring ebay and amazon to turn over data on their sellers. many sellers previously didn't report or under-reported their incomes from these sites so that should be interesting. also, many small businesses try to avoid taxes by unjustifiably classifying regular employees as independent contractors. the employer avoids payroll taxes and mandatory worker's compensation insurance premiums but the government shouldn't lose revenue in this case because the tax burden is merely shifted to the independent contractor.