Taxes and Your BusinessWord文档格式.docx

Taxes and Your BusinessWord文档格式.docx

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Asasmallbusinessowner,yourprimaryconcernsareusuallyexpressedintermsofmaximizingyourrevenue,minimizingyourexpenses,andultimately,improvingyourbottomline.Whenitcomestotaxes,however,thegoalisusuallytheopposite:

todeferincomeorreceiveitintax-favoredformssuchascapitalgainsoremployeebenefits,tomaximizeyourexpensesbymakingsureyouclaimeverydeductionyou'

reentitledto,andto 

minimize 

yourtaxablenetincome.

Becauseoftheseconflictinggoals,whichrequireverydifferentapproaches,businessownerssometimesfallintothetrapofmakingimportantbusinessdecisionsbasedmainlyonthetaxconsequences.

Don'

tletthetailwagthedog.Makesurethatyouconsideralltheconsequencesofatransactionorbusinesspractice-fromatax,financial,andstrategicviewpoint-beforefinalizingyourdecision.Whatsoundsgoodfromataxperspectivedoesnotalwaysmakesenseintermsofyouroverallbusinessobjectives.

Ourdiscussionoftheincometaxissuesfacedbyyourbusinessisorganizedaroundsevenkeysubjects:

∙Selectingyourbusinessform 

providesanoverviewofhowthewayinwhichyourbusinessisorganizedinfluencesyourtaxsituationandthewayinwhichyou'

llreportyourincome.Whilethisbookfocusesonthesoleproprietorship,weexplainhowformssuchasthepartnership,limitedliabilitycompany（LLC）,Ccorporation,andScorporationoperatefromataxperspective.

∙Definingyourtradeorbusiness 

discussesthethresholdissuesyouneedtoconsider,includingwhetheryouneedtofileasabusiness,howtoidentifyyourbusiness,howtoselectyouraccountingmethodandyear,andotherpreliminarymatters.

∙Businessincome 

discussesthetypesofincomethatmustbereportedonyourScheduleC,andforthosewhocarryaninventory,howtocomputeyourcostofgoodssold.

∙Businessdeductions 

providesdetailedexplanationsofthemostcommonlyusedbusinessdeductions,includingcarandtruckexpenses,travelexpenses,mealsandentertainment,employeecompensation,healthinsurance,andretirementplans.

∙Capitalassetsanddepreciation 

showshowtohandleyourcostsforrealestate,equipment,andotherlong-termbusinessassets.Italsoexplainswhattodowhenyousell,trade,ordisposeofanassetusedinyourtradeorbusiness.

∙Netprofit,loss,andself-employmenttax 

wrapsupourexplanationofhowtocomputeyourtaxablenetincome,explainshowtohandleabusinesslossifyouhaveone,andshowshowtocomputeandpayyourself-employment（SECA）tax.

∙Businesstaxcredits 

explainsthefederaltaxcreditsthatareavailableforhiringdisadvantagedworkers,improvingaccessbythedisabled,operatinginanEmpowermentZone,andtakingcertainotheractionsthegovernmentisseekingtopromote.

WorkSmart

Business-relatedincomeandexpensesareincludedinthe"

Employment"

sectiontabofCompleteTax.OnthefirstscreenoftheEmploymentsection,you'

llseealistofquestions.Whenyouanswer"

Yes"

tothequestion"

Didyouhaveanybusinessincome?

"

atopictabfor"

Business"

willpopup.Clickonthattabtogettothemainscreenforbusiness,whichallowsyoutoinputyoursmallbusinessinformation.

Asyoucontinuetoreadthroughthisbook,we'

llexplainunfamiliartermsandtellyouhowtohandleyourvariousitemsofbusinessincome,expense,gain,loss,etc.

SelectingYourBusinessForm

Oneofthemostimportantdecisionsthatyouwillhavetomakeinconnectionwithstartingabusinessisthelegalforminwhichtooperateyourbusiness.

Moreover,asyourbusinessgrows,youmayconsiderchangingformstoaccommodatemoreowners,adifferentcapitalstructure,oraneedtoshieldyourgrowingwealthfrombusinessliability.

Thereareseveralchoices:

∙asoleproprietorship

∙apartnership

∙alimitedliabilitycompany

∙acorporation 

（includingaregular"

C"

corporationoranScorporation）

Asyoucanimagine,therearesignificantincometaxconsequencesthatflowfromeachofthesechoices.Butdon'

tforgettoweighthetaxissuesagainstthenon-taxissues,suchaswhattypeofbusinessformwillbesthelpyoutooperateandgrowthebusiness,andwhatform,atyourdeath,willmakeiteasierforyoutopassalongthebusinesstoyourheirsasagoingconcernifyoudesire.

TaxAspectsofSoleProprietorships

Asoleproprietorshipcanbedefinedasanyunincorporatedbusinesswithasingleowner.It'

sthemostcommonlyusedformfornewsmallbusinesses.Ifyourbusinesshasonlyoneowner,theIRSwillpresumethatit'

sasoleproprietorshipunlessyouincorporateunderstatelaw.

FromtheIRS'

sperspective,thebusinessisnotataxableentity.Instead,allofthebusiness'

sassetsandliabilitiesaretreatedasbelongingdirectlytothebusinessowner.Whentaxtimerollsaround,allincomeandexpensesgeneratedbythebusinessarereflectedoneitherScheduleC, 

ProfitorLossfromBusiness, 

orScheduleC-EZ, 

NetProfitfromBusiness. 

Whicheveroftheseformsyouuse,itmustbeincludedaspartofyourannualindividualtaxreturn（Form1040）.

Togiveyouahandleonhowthisformworks,your 

grossrevenuefromsales 

and 

otherbusinessincome 

itemsarereportedonthetopoftheScheduleCorC-EZ.Expensesofthebusinessaresubtractedfromincometoarriveatthenetprofit（orloss）figureatthebottomoftheform.

ThenetprofitorlossisthencarriedoverfromtheScheduleCorC-EZandreportedonpage1oftheowner'

s1040.Thismeansthatthereisnoseparatetaxrateschedulethatappliestoasoleproprietorship—thebusinessowner'

sindividualtaxratewilldeterminetheamountoftaxpaidontheearningsofthesoleproprietorship.

Themainadvantageofasoleproprietorshipissimplicity.Becausethereisonlyoneowner,theaccountingrulesaremucheasiertounderstandandtouse.Also,abusinessownermaytransfermoneyinoroutofthebusinesswithnotaxeffectstokeeptrackof.

Forexample,whenyoupayyourselfasasoleproprietor,yousimplywithdrawmoneyfromyourbusinesscheckingaccount—youdon'

thavetoissueyourselfapaycheckandmakepayrolltaxdeductions.

Similarly,ifyoudecidetocontributesomepersonalmoneytothebusiness,youcansimplyaddittoyourcheckingaccount—youdon'

thavetoformallymake（andkeeptrackof）yourcapitalcontributionasyouwouldwithapartnershiporacorporation,atleastasfarastheIRSisconcerned.

Soleproprietorsaregenerallyrequiredtopay 

self-employmenttaxes 

onallofthebusiness'

snetprofits,ascomputedonScheduleCorC-EZ.YoumustuseScheduleSEoftheannualincometaxreturntocomputeandreportthesetaxes.

Foreachquarter,asoleproprietorgenerallyneedstomakeanestimatedtaxpayment 

thatincludesincometaxandself-employmenttaxes.

Asoleproprietorwho 

sellsabusinessasset 

oreventhebusinessitselfistreatedasifheorshesoldeachindividualitemthatwasincludedinthesale,andgainorlossoneachitemmustbecomputedseparately.Intangibleassetssuchaspatentsandcopyrightsareconsideredassetsofthebusiness,andseparategainorlossiscomputedonthemaswell.

Beyondthesebasicissues,soleproprietorsmayfacesomenotabledistinctionsintheirtaxsituations.

∙Someverysmallbusinesses 

maynotneedtofileataxformatall.

∙SomebusinessescanfileScheduleC-EZ, 

NetProfitfromBusiness.

∙Somefamily-ownedbusinesses 

canusesole-proprietorshipstatus.

∙Statutoryemployees 

useScheduleCorC-EZtoreportincomeandexpenses.

MustYouFileaScheduleC?

Ifyouarethesoleownerofabusinessoroperateasanindependentcontractor,you'

regoingtobecomeverywellacquaintedwiththetaxformusedbyallthesebusinesses:

theScheduleC, 

oritsshortercousin,the 

ScheduleC-EZ, 

NetProfitFromBusiness.

Doyouneedtofilethisform?

Whilewesuspectthatmostofyoualreadyknowtheanswertothatquestion,itpaystoreviewthefilingrequirementsjustincaseyourbusinessdoesnotmeetthemforaparticulary