Our tax prep pilot project found that 31 percent of Schedule C filers increased their AGI. Once they're in the door to formalize their business, they access resources to grow it.
San Francisco, CA (PRWEB) April 04, 2012
Nearly 13 million self-employed entrepreneurs in the U.S. – 2 million of those in California - have incomes below $50,000 Adjusted Gross Income (AGI). These are the smallest of the small businesses.
Only 1% of low and moderate income entrepreneurs in California receive business advice and assistance from entrepreneurial training programs, microlenders and other advisors in the micro sector infrastructure. We need to reach more of America’s underserved business start-ups.
All of them must file taxes, but most have no place to turn for the legal, affordable, comprehensive business tax preparation and business assistance that they need for their businesses to be successful.
Many low-income individuals use the free tax preparation services at VITA sites, but they usually do not offer Schedule C preparation because of IRS rules.
CAMEO operated its California Self-Employment Tax Initiative (CA-SETI) for four years. Eight of our member organizations offered Schedule C preparation at VITA sites.
Results of the CA-SETI project:
- Significant numbers of new low income micro-business clients had their Schedule C taxes prepared at six VITA site. The number of clients served went from 78 in 2007 to 924 in 2010.
- 60% of individuals who filed a Schedule C via the VITA site, accessed business services and learned how to use the Schedule C to control their finances.
- 60% of Schedule C filers were new filers, proving that this type of program is an effective way to formalize self-employment and broaden the tax base.
- 31% of returning Schedule C clients increased their adjusted gross income.
The SETI program in California and across the country demonstrated that tax time is a great time to reach low- and moderate-income entrepreneurs and provide them with the support they need to grow their businesses and add jobs to local economies.
The Entrepreneur Startup Growth Act (H.R. 3571) will open up a new funding source for service providers to scale up their Schedule C activities and business training. More entrepreneurs will receive services so that their businesses can thrive and create jobs.
CAMEO’s mission is to promote jobs, economic opportunity and community well-being through entrepreneurship training, business coaching and microfinance. CAMEO is California’s statewide Micro Enterprise association made up of over 160 organizations, agencies and individuals dedicated to furthering the fortunes of micro-businesses in California.