One of the most difficult things that any business person will have to address is the issue of taxes. Whether you are running the business as a company, partnership, or a sole proprietorship, the challenges are always there. However, tax challenges that face many proprietors are enormous, considering the fact that few sole proprietors have the machinery to hire tax preparers and consultants.

In legal terms, you as a sole proprietor and the business itself are one and the same person. Unlike companies where the company and the owners are different legal entities, the sole proprietorship is only considered as your name; an alias. This means that when it comes to treating the taxes that you will receive, the income that you receive from the proprietorship is considered as income to you and not income to the business. The business is perceived as a conduit.

Although the income that you receive from the sole proprietorship is considered as your income, you need to record it separately when it comes to the filing of tax returns. You will file it under Schedule C of the form 1040. The schedule C is part of the tax form that deals with profits or losses fro, your business.

Despite the fact that the income to the business is considered as income to you, you are only required to indicate on the schedule C on the profits or losses from the business venture. You are not supposed to indicate the gross sales and then start calculating the profits by creating a trading profit and loss account. No. You are simply required to indicate the amount that you will remain with after removing tax-deductible expenses such as wages, electricity, rent and so forth.

The main advantage of a sole proprietorship is that unlike a company, there are no chances of double taxation since the business is not taxed. For example, if you own shares in a company, the company, since it is considered as a separate legal entity, will be required to pay corporate taxes. From the net profit after tax, the company may distribute dividends. If the government then goes head to tax the individual on the dividends that he or she has earned, then the investor has enough would rather work with a company.

Unfortunately, one of the biggest problems that many sole proprietors find is No prescription cialis the inability to hire the professional and legal advisers that an average company many have.

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Category: Finance/Taxes
Keywords: tax refund