Employees are paid a salary, and federal, state, Social Security and Medicare taxes are withheld. The employer matches the Social Security and Medicare taxes withheld for each employee. An individual who is self-employed pays federal, state, Social Security and Medicare taxes on net self-employment income.
For many business owners, liability is a serious concern. Although a CPA can provide you with detailed advice on the tax implications of various legal structures and general advice on liability protection, you should direct any specific liability questions to an attorney who specializes in corporate law. Additional liability protection is available to any business structure by purchasing insurance.
Even though you’re just starting out, you should begin with the end in mind. What will happen to your business when you retire or die? Each legal structure provides a different answer.
If you plan to raise capital through equity investments, your legal structure will be especially important for defining the role that investors will have in governance and the distribution of profits.
Although liability and tax implications are important, the legal structure of your business will dictate certain aspects of how you operate in the years to come.
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Partnership - general and limited
Corporation — S corporation, C corporation
Limited liability company (LLC)
The choices can be complicated — and errors can be costly. Business legal structures are regulated by state governments, but your county or municipality also may have license requirements.
Welcoming a new child into your life is a great joy, but it also means big financial changes. These young family members can affect your tax situation. To start things right, here are some tips to keep in mind.
What credits are available?
Retirement is an exciting time. But just because the work stops doesn’t mean taxes do. When your income is fixed, taxes can take on a whole new hue. Whether you’re retiring now or simply thinking about your future, here are some things you should know about taxes and retirement.
To tax now or later?
As you choose your retirement vehicles, you’ll find you have options as to when you pay the taxes. Some contributions are made with after-tax dollars and provide no immediate tax benefit. When the time comes for you to draw down from these accounts, your distributions are tax-free. Other vehicles tax distributions as regular...
A wedding is an exciting milestone, but it’s also a big financial turning point for couples. Whether it’s a first marriage or two families blending, these unions have major tax consequences. Ending a marriage by divorce is also significant for your tax situation. To start off right, here are some tax tips to keep in mind.
Effects of marriage on taxes — If spouses have disparate incomes, they may see a marriage bonus. If one spouse’s income falls into a higher tax bracket than the other before marriage, their combined incomes may drop the couple down into a...