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
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.