SMALL BUSINESS TAXES CREATING STRUCTURE
March 3, 2022 - Douglas Myser
Small business taxes creating structure. This is a multi part article designed to help small businesses, in an effort to prevent them from obtaining tax debt's at the beginning of their business. The first thing you need to determine, when creating a business, is the structure of the business. This is important, in regard to your taxes, because different tax structures come with different rules for taxes, and potential liability from doing business. Do you want to be a Sole Proprietorship ? This is the most common form of business structure, and it consists of just own person as owner, who takes all the businesses profit's as personal income. As the owner of a sole proprietorship, you are personally responsible for any business debts, in the eyes of the IRS, you and the company are the same entity. The best part of taking this as your status, is that the filing of taxes as a sole proprietorship is the easiest, most simple of all the different structures available. Small business taxes creating structure.
A partnership is another structure you may choose, if you in fact have a partner you want to go into business with. This type of structure is somewhat similar to the sole proprietorship. The IRS taxes these businesses the same way, except that the partnership can have as many owners as necessary. All owners are still personally liable for any business debts. A partnership is what is call a pass-through tax entity that reports profits and losses on form 1065. The partnership does not pay income taxes but instead passes the tax liability to the partners. The partners receive a Schedule K-1 from the partnership to report their share of the profits and losses on their form 1065 and pay the taxes.
Whatever the tax entity you choose, if you fall behind on your taxes and need help you may always call a Tax Resolution Company for help. If you are behind on taxes and want to explore the options for reduction, including the IRS Fresh Start Program, click the last link for information.