If you employ workers from an economically disadvantaged group, your business may be entitled to a Work Opportunity Tax Credit (WOTC). The credit equals 40% of the first $6,000 of wages paid to a qualified worker during the year.

But, you might also claim a special “summertime credit” for hiring youths age 16 or 17 who work for your business between May 1st and September 15th. The youth must reside in an Empowerment Zone (EZ) or Renewal Community (RC). The WOTC for these workers is 40% of the first $3,000 of wages. You can use the EZ/RC address locator located on the HUD website to find out if a worker qualified for this credit.

Small business owners, if you find a postcard in the mail from the IRS, have no fear; it is likely not an audit notice.

The IRS is alerting about 4 million small business owners of the availability of a new tax credit this year. If you are an “eligible small employer” and pay more than 50% of the cost of health coverage for staff, you may qualify for a tax credit of up to 35% of what you pay. If you don’t pay for health coverage for your staff but have been thinking about doing so, this credit may be something to discuss with your financial advisor.

If your business pays some or all of the health insurance premiums for staff, it may be eligible for a new federal tax credit created by the Patient Protection and Affordable Care Act, signed into law on March 23, 2010. The IRS has guidance on this credit in question-and-answer and scenario forms on its web site to illustrate how the credit works.

Sole proprietors, did you know that changing your business entity type may minimize the risk of an IRS audit? You can, for example, incorporate and use S corporation status. The audit rates on S corporations, even if they are one-owner entities, are dramatically lower than the rates on sole proprietorships.

During the government’s fiscal year 2008 (ending September 30), sole proprietors with gross receipts of between $100,000 and $200,000 had audit rates of 3.9%. The audit rate on all S corporations was only 0.4%.

There are many substantive business reasons to convert a sole proprietorship to another business entity type. Minimizing your risk of audit is just a collateral benefit.

Today is the deadline for filing 2009 individual and partnership tax returns (and providing partners and LLC members with Schedule K-1s). It is also the deadline for paying the first installment of estimated taxes for 2010.

If you are unable to file today, request an automatic six-month filing extension for your personal return on Form 4868. A five-month extension can also be requested for a partnership return using Form 7004. A filing extension is not a red flag to the IRS that will invite an audit. However, if you owe taxes on your 2009 return, an extension won’t give you more time to pay these taxes. When you request a filing extension, pay the tax you estimate that you will owe, if any, to minimize interest and penalties.