My biggest tax nightmare!

From deciphering mind-boggling tax codes to fearing being hit with even higher income tax rates, these six small business owners talk about their worst tax headaches.

Lost $30,000
Lost $30,000
Kara and Theo Goldin say California's tax system is hurting them.
Owner: Kara and Theo Goldin
Company: HINT, naturally-flavored water
Location: San Francisco

Kara and I financed our business ourselves for the first few years before getting outside funding. Our business has created jobs in California and in a few other states.

Anyone in the beverage industry knows that when you get in, you are investing ahead of growth. So you will probably lose money, and a lot of it, before you start to make money. One thing that takes the pain out of this reality for us is that in California you could take advantage of business losses to offset income and reduce taxes.

Not anymore. California's economy is in rough shape. So the state is trying to increase tax revenue. California suspended the net operating losses (NOL) tax provision for businesses. So if you lose money in one year, you no longer can apply that loss to profitable years. The state says it can't afford to let us use the NOLs. How do they think that we can afford it?

As a small business owner, I invested ahead of growth and created jobs. By suspending the use of the net operating loss tax deduction, California changed the deal in a way that cost my wife and I almost $30,000 last year. This year it will be more than that.

Not all small businesses create jobs, but a bunch of us do. But we shouldn't be penalized for taking that chance. California can't afford to not let small businesses create jobs.


As told to Parija Kavilanz @CNNMoney - Last updated December 12 2011: 2:32 PM ET
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