Small business tax rate
The Small business tax rate is a point of much concern to small business. Especially when the New York Times reported that President Obama was reviewing an old proposal to lower the corporate tax rate to 28% (and 25% for manufacturers) less than a year after he raised the top individuals income tax rate paid by many small businesses to 39.6%. Indeed, the National Federation of Independent Businesses and the S Corporation Association found that two of the most common types of small businesses pay a percentage of their income to the government that is more than double that of large corporations.
Are you a small business?
A small business is any business that has no more than 100 employees. In addition to conventional small businesses, this category includes (for tax purposes) people who earn income through rents, royalties, partnerships and limited liability companies. This definition may have surprised you. Hopefully, you took advantage of all the tax deductions and benefits available to you. If not, there is still time to check if you qualify for additional deductions or credits. An amended return may help you keep more of your hard earned money.
Protect your bottom line
If you are a small business and you didn’t have a tax advisor before, it is even more critical to get one now. Every tax credit and deduction may help you get closer to protecting your bottom line in a down economy. Federal, state and local taxes represent a major cost of doing business and this is particularly true for small business. If you haven’t kept up with your estimated payments or paid any state or local taxes you need to get a tax attorney to assist you. Why? Because, attorney client privilege gives you the confidence to fully disclosure your tax situation. This helps you move in the right direction for solving your taxes issues.
Federal income tax rates
Calculating the overall costs of federal income taxes to small business owners requires an examination of both corporate and individual income taxes to explore who bears the burden of the taxes on business income. Thus, there is a difference between the statutory tax rate imposed on business income and the effective rates that the small business (and it owners) may face. Effective tax rates provide a more accurate picture of how taxes are imposed on small business owners than statutory tax rates. An evaluation of your effective tax rate may help you decide whether a new business venture will provide the returns you anticipate. It can also help you see a comprehensive picture of you small business’ financial picture.