Business Entity Tax Consequences
Taxable Consequences of Each Business Entity
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Business Entity Tax Consequences
Caution !!!
We don’t want to dampen your enthusiasm – but, it’s far better to make preparations up front rather than suffer a catastrophic tax shock later on.
The IRS can be a vicious and hungry creature. This is especially true in an age when a huge government bureaucracy (not only Washington D.C. but the States and local municipalities) are desperate for your tax dollars.
So pay close attention to all of the following:
IRS Dangers
Sole Proprietor Tax Filing
A sole proprietor files a Schedule C in conjunction with the individual 1040 income tax return. Profits are taxed as ordinary income and losses reduce your taxable income.
See Sole Proprietor – IRS Website- Sole Proprietor
If your sole proprietorship earns $400 or more, you must also file Schedule SE
See Self-Employment Tax – IRS Website-Self-Employment Tax
The IRS Is Targeting The Sole Proprietor
As of January 2010 the word is out that as a result of internal audits by the IRS, an annual revenue collection shortfall of $300 billion dollars per year has been found. The IRS believes that the shortfall is not coming from the large corporations but from the small businesses. The IRS is primarily targeting the sole proprietor — approximately 67% of all small businesses — who file taxes on a 1040 Schedule C return.
Is Your Small Business Operating as a Sole Proprietorship?
If this is you it would be wise to consider converting to one of the forms of corporate entity.
By IRS statistics, if you operate your business as a sole proprietorship, you are 300% more likely to be audited by the IRS, compared to a corporation or LLC.
Is Your Small Business Really Just A Hobby?
If you are just starting a small business, home business, or perhaps an internet business, it is vitally important that you see the following information:
See Business or Hobby? – IRS View
Our thanks to our sister company Diversified Business Online for the preceding info.
How The Small Business Kickstarter Program Works
Many of our Custom Programs are designed for the small business on a tight budget. Instead of an upfront investment to get started, we partner with you and are compensated as we grow your business. We are results oriented.
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