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Business Tax Laws
there are several different types of taxes, and business tax is just one of them. Business tax will all depend on how the business is classified, be it an S Corporation, a Limited Liability Company, or a Sole Proprietorship. But how do business taxes affect these different types of businesses? Are the business tax expenses deductible for the business? Questions like these regarding business tax laws are answered below by the Experts.
What is business tax?
Business tax may also be known as company tax or corporation tax. This tax is based on the capital, income, may be imposed on types of legal entities and can range from city taxes all the way to
. The majority of countries impose business taxes on businesses within the country, on the income that was made in that county. Some countries impose business tax on all income of the businesses that are organized in that country. The company’s income is subjected to taxes in a similar manner to an individual’s income. For the most part a company’s net profits are subject to business tax.
If a business in the state of Michigan receives all their sales from overseas does the business have to file a Michigan Business Tax?
According to the United States tax law, any money that has been earned, even worldwide, has to be reported to the IRS on a
return if the corporation was formed in the United States. In regards to the Michigan Business Tax, a company is required to pay Michigan Business Tax only if the
received in Michigan are in excess of $350 thousand. If a company based in Michigan has no receipts received in the state of Michigan, then that business will not be required to pay Michigan Business Tax.
Are coupons and discounts tax deductible for a S Corporation business when filing business taxes?
The business would not deduct the cost of the coupons or discount. For business tax reporting purposes a business would only report the income received post coupon or discount. A coupon or discount, that have not been used are not deductible for the business, since the business did not incur any costs from coupons that were not turned in. An example would be a business offering a $100 off the purchase of a new set of tires, if one person comes in and purchases a set of tires that would normally cost $400, the business would only report the $300 made after the discount was redeemed.
When are business taxes deductible, the year the incurred or the year they are paid?
When business taxes are able to be used as
will depend upon what type of accounting method the business uses, cash or accrual. If a business is using the accounting method of cash then the business tax expense would be deducted in the year that the business tax expense was paid. If the business is using the accounting method of accrual, then the business tax expense would be deductable the year that the business tax was incurred. The cash method is the primary accounting method for many individuals and small businesses.
Business tax expenses are deductible, but when the
is to be made will depend on the business’s accounting method. Business tax law may at times be hard to understand, if a person doesn’t understand and may need Expert advice.
Recent Business Tax Questions
I have a business tax question experienced - I
I have a business tax question for someone experienced -
I am a small business owner leasing an office, and I also have a home office. I wish to buy a new home with much larger office space and walk away from renewing another lease, despite the small write-off I receive from it. Instead, I wish to find a way to write off part of the purchase of the new home as the new office (Please note, I do not have employees working in office - just myself). I do not know how to handle this in detail, and I need advice. I realize a home office needs to be separated from the rest of home (similar to what I already do today). I should note, I will plan to sell the old home rather than lease it because I do not see any tax benefit. (yes, the home is paid off). I need advise on how to write off the "purchase" of this new home office space to minimize taxes. In another desperate effort to minimize taxes, I will purchase a new business vehicle again (despite me not needing a 3rd vehicle) to minimize taxes - Not doing this will mean paying more taxes. Would it be prudent to purchase another home later and call it my office? I would need to take out a mortgage for this to happen. The first home I could pay cash, or take out a temporary loan, (at least until this existing home is sold). Do you have ideas, or suggestions for better way to handle this? At present, it appears I will be paying near $100k to fed in taxes if I do not find a way to handle this. Thank you
Robin -- I have a new, unrelated question: I have an
Hi Robin -- I have a new, unrelated question:
I have an AZ LLC that is a Sched C filer as a disregarded entity. This has been operating continuously for several years. I have not wanted to undertake all the tax filing requirements or withholdings by converting to a Sub-S.
Last year, myself and another individudual from CT, filed a separate CT LLC and we file on the basis of partner K1s.
The latter especially is creating a large SE tax burden.
My LLC "partner" has another longstanding entity, a Sub-S which I believe files as a corporation.
Do we gain anything tax wise if we each assign our CT LLC interests to our respective entities (mine to my AZ LLC and him to his CT sub-S. If not, would a joint enture between the AZ LLc and CT Sub-S provide any tax advantages? If so, we would transfer the intellectual property, bank accounts and payables/receivables and would terminate the CT LLC.
Or is their any other legally viable strategy for lowering the SE Tax burden without taking on complex filing requirements, etc. Since I work alone from home, pretty much 24/7, I need to keep my tax filings as simple as possible.
Also, for my AZ LLC, I keep it as a Sched C filer because the income fluctuates wildly from month to month so there is no way to set a salary. Even if I were to just take a partial (I just take whatever is left after paying its bills which can be $0), I would have so many Notes owed to me by the LLC that it would likely look strange.
Even though we worked with CPA's, up to this year they
Even though we worked with CPA's, up to this year they never took into account our losses on property abroad (less rent than cost) and investment losses.
So I'm thinking about the best way to revise my previous tax filings. So a few questions:
1. How far back can we revise (while still getting a refund)
2. What is the proof the IRS wants (for instance is my checking account enough to show cost vs rent income)?
3. What are any other things we have to consider in making this decision?
4. Who can we best work with? HR Block, CPA?
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