With the tax season right around the corner, most businesses and individuals are preparing to file tax returns and taking stock of their profits, losses, and income. For small businesses, all these are included in personal tax returns based on the salaries of their owner/owners. Small businesses are single-member LLC owners and sole proprietors and their taxes are filed under Schedule C along with Form 1040.
For individuals, the highest tax rate is 39.6%. This depends on an individual’s income, and a small business will have to pay taxes on this percentage. Adding local and state taxes, small business taxes will go up to nearly 50%. This is quite a high percentage of tax a small business will pay when compared to a corporation who would be paying at the tax rate of around 35%. With their limited scale and profits, small businesses may have to incur high taxes unnecessarily. Here are a few simple ways to save on small business taxes.