Corporate vs. Small Business Tax Resolution


Just as an individual can be audited by the Internal Revenue Services (IRS), so too can a small business. Let’s talk about a small business tax resolution. Keep reading to learn about Corporate and Small Business Tax Resolution. 

Corporate and Small Business Tax Resolution

Corporate and Small Business Tax Resolution

Although small business tax resolution is not as prevalent as tax resolution for individuals,  it’s just as needed – maybe even more so.

What’s more: there are not as many blog posts, brochures, marketing materials – help – circulating in the world as well for – not to seem redundant, but – individuals.

Do a Google search. Find out for yourself!

So, what are the tax considerations small businesses must take over and above regular, personal filings?

Let’s break it down.

Tax Filings Are Not Appreciatively Different Until the Income Hits 500K

With both individuals and businesses, the amount of income is what dictates tax calculations. And they are the same until the income meets or exceeds 500,000.

Here’s how the brackets break down up to the 500,000 marks.

  • $40,000 – $6,350 (single); $6,350 (married, separate); $5,201 (married, joint); $6,000 (corporation)
  • $100,000 – $21,979 (single); $17,688 (married, joint); $22,372 (married, separate); $22,250 (corporate)
  • $500,000 – $153,597 (single); $146,575 (married, joint); $160,788 (married, separate); $335,000 (corporate)

If you compare the brackets disclosed here, you will notice corporate tax rates are comparable to single filings in the first and second brackets. Whereas, in the $500k+ bracket, the corporate rate jumps considerably. The corporate tax rate charges more than double the other categories within the bracket. 

Ok, Here’s the Good News: Knowledge of This Can Prevent Such Steep Business Tax Rates

Up to the 500k mark, small business tax resolution looks a lot like other types of tax resolution services. Now, the steepness of this rate jump can be avoided if you file your taxes as a partner LLC or sole proprietor LLC rather than a corporation. 

In short: as a small business, corporate tax rates are to be avoided until your business has taken proper measures to scale and attack revenue once it becomes able to make 500k+. 

Why file as an LLC rather than a corporation? 

As a small business, it is feasible to file as an LLC which defaults more toward an individual or personal tax rates, while corporate tax rates often handle the owner’s income as if they were an employee. 

That’s it. We hope that you have understand the Corporate and Small Business Tax Resolution process. Understanding this insight can help your business stay afloat at the steepest tax rate change. 

Further Reading

  • How Much Should I Offer in Compromise to the IRS?

    If you cannot pay your tax debt, you can try to settle with the IRS for less than what you owe. If successful, a partial payment arrangement or offer in compromise may be an option. An offer in compromise is a settlement agreement between a taxpayer and the IRS that allows taxpayers with financial hardship to resolve their tax debts for less than the full amount owed. The Offer In Compromise program becomes an option when other collection efforts have proven unsuccessful and allow you to settle your tax debt for less than what you owe. Here are some questions and answers about OICs…

  • How Much Will the IRS Usually Settle for? A Closer Look at Offers in Compromise

    How Much Will the IRS Usually Settle for? Each year, the Internal Revenue Service (IRS) approves countless Offers in Compromise with taxpayers regarding their past-due tax payments. Basically, the IRS decreases the tax obligation debt owed by a taxpayer in exchange for a lump-sum settlement. The average Offer in Compromise the IRS approved in 2020 was $16,176. How do we get to that amount? In 2020, the IRS accepted 17,890 Offers in Compromise with a total worth of $289.4 million (resource). Divide $289.4 million by 17,890, and – presto! – you get an average deal in compromise of $16,176. Naturally, that number is meaningless…

  • What is the IRS Tax Obligation Forgiveness Program?

    Benjamin Franklin once wrote, “Our new Constitution is now established, and has an appearance that promises permanency; but in this world, nothing can be said to be certain, except death and taxes.” And sometimes death is preferable – ok, we added that part. In this article, we answer the question “What is an IRS Tax Obligation Forgiveness Program?” – Does such a program exist? And what do you do to benefit from it? In some cases, there is no way out of either one – death or taxes. But, if you find yourself on the wrong side of the IRS, however, you might be in luck: you qualify for the IRS tax forgiveness program. This program falls under the Deal in Concession part of the United States Tax Code…

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