Summary: Tax Essentials for Selling Your Business
Selling a business requires proactive tax planning because the IRS views the sale not as a lump sum, but as a collection of individual assets.
The Quirky Math of Partnership Income
When it comes to taxation, partners in a business may find the math a bit puzzling. You may discover that the amount of partnership income you’re taxed on is more than the amount that was distributed to you. That’s a quirk of taxation that lies in the way partnerships and partners are taxed.
Incorporation: Watch Out for Compensation Issues
Small to midsize businesses have valid reasons for incorporating, not the least of which is putting that cool “Inc.” at the end of their names. Other reasons include separating owners’ personal assets from their business liabilities and offering stock options as an employee incentive.
The Pros and Cons of Operating as a C Corporation
When deciding on the best structure for your business, one option to consider is a C corporation. This entity offers several advantages and disadvantages that may significantly affect your business operations and financial health. Here’s a detailed look at the pros and cons of operating as a C corporation.
Self-Employment Tax: A Refresher on How It Works
If you own a growing, unincorporated small business, you may be concerned about high self-employment (SE) tax bills. The SE tax is how Social Security and Medicare taxes are collected from self-employed individuals like you.
Help Ensure Your Partnership or LLC Complies With Tax Law
When drafting partnership and LLC operating agreements, various tax issues must be addressed. This is also true of multi-member LLCs that are treated as partnerships for tax purposes. Here are some critical issues to include in your agreement so your business remains in compliance with federal tax law.
Why an LLC Is Perfect for Your Small to Medium Business
Choosing the right business entity is a crucial decision for any business. The entity you pick can affect your tax bill, your personal liability, and other issues. A limited liability company (LLC) is an attractive choice for many businesses. It can be structured to resemble a corporation for owner liability purposes and a partnership for federal tax purposes. This duality may provide the owners with several benefits.
Understanding Taxes on Real Estate Gains
Let’s say you own real estate that has been held for more than one year and is sold for a taxable gain. Perhaps this gain comes from indirect real estate ownership via a pass-through entity such as an LLC, partnership, or S corporation. You may expect to pay Uncle Sam the standard 15% or 20% federal income tax rate that usually applies to long-term capital gains from assets held for more than one year.
Addressing Concerns When Selling Your Home to an S Corporation
Want to make money by renting out your home? If done correctly, this can boost your cash flow with minimal effort. Selling your home to your S corporation is one of the best strategies. Here’s why it’s better than just converting your home to a rental property.
Tax Considerations When Choosing a Business Entity
Are you in the process of starting a business or contemplating changing your business entity? If so, you’ll need to decide how to organize your company. Should you operate as a C corporation or as a pass-through entity such as a partnership, limited liability company (LLC), or S corporation? Among the important factors to consider are the potential tax consequences.