There are not a lot of people who think taxes are the worst thing in the world. I’m not saying they are right or wrong.
But you are a business owner and no matter what, you have to pay taxes.
There are a few breaks that you have as a business owner though when it comes to taxes, that employees do not receive.
When you are an employee, you always pay tax on your gross income.
As a business owner, you can deduct your business expenses from your income before taxes are calculated. You then owe tax on the net profit, not the net revenue.
Even though you get to deduct your expenses from your revenue, you still don’t think taxes are a good thing though. They are taking your hard earned money that can be used somewhere else.
Yes it could be used somewhere else to help you continue to grow your business.
But when you have tax bills in your business, it means that your business is actually making money and not spending every penny.
Can I still pay nothing in tax when I’m making money?
Yes you can. Donald Trump’s and Amazon’s tax returns really come to mind here.
But that also means that you are spending just about as much money as you make and not paying yourself.
Depending on the type of business you have, also depends on how much tax you pay.
If you are a sole proprietor or single member LLC, you’ll pay tax on everything in your net profit, plus everything you pay yourself. You’ll pay the payroll tax on this amount of money - social security and medicare tax.
If you are an LLC filing as a corporation or a corporation, you’ll pay payroll taxes each quarter and then pay tax on the net income in your business.
You have a small business, so spending all of your money isn’t always the best thing you can do. You need to be able to pay yourself. You need to be able to keep money in the bank.
Paying nothing for taxes isn’t something you really want to do.
Taxes support the first responders, the roads and other things you use daily
The taxes you pay with your business also help support the first responders that show up to accidents and other similar things like that.
They pay to fix the roads that you drive on and keep the bridges safe for you to cross.
I know no one really likes to pay taxes. But they should be part of the budget that you have in your business. You do have to pay them.
You do get to deduct your expenses
As a business owner, you do get to deduct your expenses from your profit.
You don’t pay tax on your full revenue, unless you have no expenses.
When you work a job for someone else, you pay taxes on the full amount of your income.
Making more money in your business means you pay more taxes
It does mean you pay more in taxes. But it also means that you really are making more money in your business.