Tax Guide for Business Owners (by a CPA)

Explore the most common business structures, their advantages and disadvantages, and the factors that influence choosing one, including ownership, services versus investments, profitability, tax treatment, liability, compensation, and compliance costs.

A sole proprietorship has one owner and is not a separate legal entity, but maintains records and a bank account; taxes stay simple with Schedule C on your personal return.

Explore how LLCs offer versatile tax treatment for single or multiple owners, with options from sole proprietorship to S corp or C corp elections, including K1 statements.

Explore how corporations differ from LLCs, choosing between C corporation and S corporation tax treatments, and how flow-through taxation, phantom income, double taxation, and state considerations impact owners.

Determine taxable income as revenue minus expenses, noting cash contributions or draws do not count; learn self employment taxes and quarterly estimated payments for sole proprietorships, partnerships, and corporations.

Identify how owners are paid in different tax contexts, including sole proprietorships, partnerships, s corporations, and c corporations, through wages, guaranteed payments, distributions, or draws.

Learn to make quarterly estimated tax payments and avoid underpayment penalties by using IRS direct pay or state options, and apply safe harbor rules.

Learn which business expenses are deductible or not, including meals, entertainment, and home office deductions, and how to allocate vehicle costs using mileage tracking, standard rate, or actual expenses.

Learn how to track your business finances by using a dedicated bank account and digital records, log business miles, categorize transactions, and generate reports for tax planning and filings.

A preview shows how easy it is to use cookbooks online by connecting a bank feed and applying suggested categories to deposits, which appear in the profit and loss report.

Engage a tax accountant to provide year-round planning, ensure compliance, minimize your tax liability, and help with estimated tax payments and retirement planning.

Learn how payroll processes payments, wages or salaries, withholds employee taxes and files payroll tax returns, and explore selecting a payroll service provider and gathering account numbers for smooth payroll.

Evaluate payroll service options from Cowpokes online payroll, Gussow, and full-service providers like ADP and Paychecks, weighing integration, transparency, and customer service, with a recommendation for Gussow.

Register with the state, obtain unemployment and withholding accounts, secure a federal EIN, and coordinate with an accountant for in-state and out-of-state payroll within deadlines.

Navigate state and local compliance for your business by understanding registration, annual reports, licenses, taxes, and property obligations, and consult your accountant for payroll filings.

Explain S-corporation compliance requirements for owners, including paying reasonable wages and payroll taxes, with net income flowing to owners’ personal returns and health insurance deductions for greater-than-two-percent shareholders.

Explore retirement plans for business owners to reduce tax liability, reward employees, and enjoy tax-free compounding growth. Compare plan options, contribution limits, and tax implications, including tax-deductible and Roth contributions.

Compare tax-deductible and Roth retirement contributions, highlighting immediate tax deductions versus tax-free retirement withdrawals, with guidance for younger taxpayers, expected higher future tax rates, and early withdrawal considerations.

explore traditional ira and roth ira accounts as low-cost retirement options for business owners and their employees without requiring a company plan, with rules on contributions, deductions, and income limits.

Analyze sep ira and separate plans, noting high contribution limits (up to $57,000 in 2020 and $58,000 in 2021 per owner or employee), no employee contributions, and deadline extensions.

Learn about 401k and profit-sharing plans for business owners, including salary deferrals, safe-harbor employer matching, catch-up contributions for ages 50+, and limits of 57k (2020) and 58k (2021) per employee.

Explore simple IRA plans as a low-cost retirement option with lower setup and administrative costs, employer matching of 3–4 percent, and deferral limits of $13,500 plus $3,000 catch-up.

Defined benefit plans fix benefits and use actuarial calculations to set contributions, enabling greater funding than SEP IRA or 401(k) plans, though costly and suited for businesses with owner-qualified employees.

Compare asset purchases and stock purchases when acquiring a business, noting asset purchases reduce liabilities and offer favorable tax treatment via depreciation and amortization, while stock purchases transfer liabilities.

Consider buying an office building if your business is established and plans to stay, gaining rental income potential and tax benefits like depreciation and mortgage interest deductions.

Conclude the tax guide for business owners and contact Adjaye Sutton, CPA for a free 30-minute consultation. Rate this course, share feedback, and explore tax services from Bethesda, Maryland.