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Casual Articles - How To Avoid Double Taxation Of Your Small Business Profits
Your personal credit report is an electronic record of your credit activities. These activities include borrowing money to buy a car, applying for a loan or credit card and your payment history of the loans you have taken. Every time you apply for credit or a loan, potential lenders use this report to see how you use credit and how much of it you have available.According to TransUnion, one of the three major credit burea
And once is enough, don't you think!
Of course, any article on Choice of Entity must contain the old disclaimer, "Consult your tax professional" -- I am not prescribing a one-size-fits-all approach to this issue. But for many small biz owners and self-employed folks, the "S" Corporation is a good fit because it provides protection from p
Availing Secured Personal Loans can be a good option, if you are not in a position to spend heavily on the monthly installments to meet some of your urgent needs..A secured personal loan is a loan which is usually secured on your house or property that may include your shares and other valuables. The collateral serves as a security to the creditor and acts like an assurance of the repayments.Secured pers
For starters, you'll be protecting yourself and your family from the possible of a business ending lawsuit. Forming a corporation is Step One on the path known as "Asset Protection" -- you are moving from the world of unlimited liability to the world of limited liability.
(NOTE: For further insight into the legal advantages of incorporating, check out the article: "It Can Happen To You: Why Any Sole Proprietorship Is A Risky Business" at http://www.YouSaveOnTaxes.com/happen-to-you.html)
From a tax standpoint, there are both advantages and disadvantages to incorporating. Yes, forming a corporation can either reduce your taxes or increase your taxes, depending on what type of corporation you create.
There are two main types of corporations: "C" Corporations and "S" Corporations -- and which type you choose can make all the difference in the world of taxes.
NOTE: The question of "C" Corp vs. "S" Corp has no effect on the asset protection provided by your corporation. This is a tax issue, not a legal issue.
A "C" Corporation can lead you into a Tax Trap known as "double taxation". Yes, income from a "C" Corporation can actually be taxed twice -- once when it's earned on the corporate level and again when it's paid to you, the shareholder, in dividends.
There are several ways to avoid double taxation. Often the easiest way is to tell the IRS that you choose to be an "S" Corp instead of a "C" Corp. The profits of an "S" Corp are not taxable to the corporation; instead, those profits are reported directly on the shareholder's personal income tax return and are therefore only taxed once.
And once is enough, don't you think!
Of course, any article on Choice of Entity must contain the old disclaimer, "Consult your tax professional" -- I am not prescribing a one-size-fits-all approach to this issue. But for many small biz owners and self-employed folks, the "S" Corporation is a good fit because it provides protection from pe
An estate plan is a legal system for the disposal of your property upon your death. It recognizes your wishes, such as those regarding the care of minors, and it legally minimizes taxes. It can take into account your views regarding future medical care; for example, it may state you have no wish to have your life sustained by a life support machine. Estate planning may or may not involve tax planning. The single most important
From a tax standpoint, there are both advantages and disadvantages to incorporating. Yes, forming a corporation can either reduce your taxes or increase your taxes, depending on what type of corporation you create.
There are two main types of corporations: "C" Corporations and "S" Corporations -- and which type you choose can make all the difference in the world of taxes.
NOTE: The question of "C" Corp vs. "S" Corp has no effect on the asset protection provided by your corporation. This is a tax issue, not a legal issue.
A "C" Corporation can lead you into a Tax Trap known as "double taxation". Yes, income from a "C" Corporation can actually be taxed twice -- once when it's earned on the corporate level and again when it's paid to you, the shareholder, in dividends.
There are several ways to avoid double taxation. Often the easiest way is to tell the IRS that you choose to be an "S" Corp instead of a "C" Corp. The profits of an "S" Corp are not taxable to the corporation; instead, those profits are reported directly on the shareholder's personal income tax return and are therefore only taxed once.
And once is enough, don't you think!
Of course, any article on Choice of Entity must contain the old disclaimer, "Consult your tax professional" -- I am not prescribing a one-size-fits-all approach to this issue. But for many small biz owners and self-employed folks, the "S" Corporation is a good fit because it provides protection from p
You need to know whether you should be printing a couple hundred or a couple of thousand business cards.Designing a business card is an exercise in imagination. Actually printing a business card, however, is an exercise in economics.You should have a card that will, all other things being equal, convince a potential contact to actually pick up the phone and contact you. But all other things aren't necessarily eq
NOTE: The question of "C" Corp vs. "S" Corp has no effect on the asset protection provided by your corporation. This is a tax issue, not a legal issue.
A "C" Corporation can lead you into a Tax Trap known as "double taxation". Yes, income from a "C" Corporation can actually be taxed twice -- once when it's earned on the corporate level and again when it's paid to you, the shareholder, in dividends.
There are several ways to avoid double taxation. Often the easiest way is to tell the IRS that you choose to be an "S" Corp instead of a "C" Corp. The profits of an "S" Corp are not taxable to the corporation; instead, those profits are reported directly on the shareholder's personal income tax return and are therefore only taxed once.
And once is enough, don't you think!
Of course, any article on Choice of Entity must contain the old disclaimer, "Consult your tax professional" -- I am not prescribing a one-size-fits-all approach to this issue. But for many small biz owners and self-employed folks, the "S" Corporation is a good fit because it provides protection from p
When I was first promoted to management, I had to make a very difficult decision.I had been the best salesperson on the crew, and Bud was number two. He and I vied for the management job, and the fact that I got it meant that he had to report to me.This irked him.So, when I recruited, trained, and launched the careers of new salespeople, Bud found a way to poke holes in their boats, to slow them down, to di
There are several ways to avoid double taxation. Often the easiest way is to tell the IRS that you choose to be an "S" Corp instead of a "C" Corp. The profits of an "S" Corp are not taxable to the corporation; instead, those profits are reported directly on the shareholder's personal income tax return and are therefore only taxed once.
And once is enough, don't you think!
Of course, any article on Choice of Entity must contain the old disclaimer, "Consult your tax professional" -- I am not prescribing a one-size-fits-all approach to this issue. But for many small biz owners and self-employed folks, the "S" Corporation is a good fit because it provides protection from p
Have you ever been among a group of people exchanging contact details? Notice the scramble for that good old-fashioned instrument, the pen. See the woman upturn her purse searching for one and the impatient expressions on the faces of the people with her. Watch their eyes light up when she finally finds it. The relief is palpable; information can now be taken down for use at a later stage. The pen makes it possible. In a second
And once is enough, don't you think!
Of course, any article on Choice of Entity must contain the old disclaimer, "Consult your tax professional" -- I am not prescribing a one-size-fits-all approach to this issue. But for many small biz owners and self-employed folks, the "S" Corporation is a good fit because it provides protection from personal liability and avoids the nasty tax trap of double taxation -- two great benefits worth checking into.
Should you incoporate your sole proprietorship and then decide that the "S" Corporation is the right fit, you must inform the IRS that your corporation is choosing "S" Corporation status by filing Form 2553, which is, in effect, an application to become an "S" Corporation.
IMPORTANT: If you incorporate and do not file Form 2553, you are automatically considered to be a "C" Corporation by the IRS. In other words, to be a "C" Corporation, you just incorporate; there is nothing you have to do to inform the IRS you want to be a "C" Corporation.
There are critical rules regarding how and when to file Form 2553, so be sure to read the instructions carefully, or check with your tax pro.
Failure to file Form 2553 on time or filing Form 2553 incorrectly results in a rejection of your corporation's "S" Corp application, and the corporation is then by default treated as a "C" Corp, subject to double taxation, the very trap you were trying to avoid.
To download a copy of Form 2553, go to: http://www.irs.gov/pub/irs-pdf/f2553.pdf
The instructions for filing Form 2553 are found here: http://www.irs.gov/pub/irs-pdf/i2553.pdf
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