Sole Proprietorship Taxes
Limited liability companies and corporations come with highly complex tax structures. When one of these companies is created, the owners must deal with an immense amount of paperwork and record-keeping. For this reason, many people who wish to start small businesses instead choose to file as sole proprietorships. Sole proprietorships have a much easier tax process, but they still carry certain disadvantages.
If you are the owner of a sole proprietorship or are thinking of beginning one, you may benefit from the services of a professional accounting group. Having the guidance of a professional accountant can help you avoid major accounting and tax pitfalls as well as provide you with more free time to focus on your business. To learn more about how an Austin accounting consultant can help you, fill out the form at the top of the page.
Taxes in a Sole Proprietorship
Taxes in a sole proprietorship are the easiest to file because they are actually “pass through” taxes. This means that they are filed along with the owner’s personal tax returns. In the same way that an individual would list his or her wages, sole proprietors list their profits. However, they are denoted under Schedule C on the form, titled “profits and losses from a business”.
Money that the business spends on travel, ads, equipment, and more is often tax deductible. However, unlike corporations and limited liability companies, money left over at the end of the year that is intended for reinvestment will still be taxed. Because of this, many people choose to incorporate their businesses.
No matter what type of business you choose to run, the assistance of a professional accounting group can be invaluable. If you are the owner of a sole proprietorship and have questions and concerns about the benefits and disadvantages of registering as a sole proprietor, don’t hesitate to contact the Austin accounting consultants by filling out our form above.