The Taxes Of Being An Entrepreneur
ThomasNet:
For businesses, taxes affect location decisions, job creation and retention, competitiveness, and the long-term health of the state and nation’s economy. While entrepreneurs and small businesses constitute a larger portion of today’s workforce, they also contribute a larger share of tax revenue.
A record number of Americans started companies last year. Small businesses have long been referred to as the engine of the national economy. Today they’re also providing the fuel. While entrepreneurs constitute a larger portion of our workforce, they also contribute a larger share of tax revenue.
Engaging in entrepreneurship and starting a small business can be made more or less difficult by the structure of income taxes. Although federal income taxes are the single largest tax on small business, state and local taxes can also affect small firms.
According to nonprofit research institute the Tax Foundation, the owners and partners of privately held companies pay more than 54% of all individual income taxes. Further, the majority of business tax returns are now filed by small businesses; the Tax Foundation estimates that 60% of all corporate tax returns are now from S-corporations. In fact, between 1980 and 2005, the number of S-corporations, farms, sole proprietorships, and partnerships filing business returns grew by 572%, to 3.7 million.
Earlier this month, the Senate Finance Committee held a hearing on whether tax credits should be used to ‘offset the harm done to some businesses as a result of the minimum wage increase.’ The tax breaks aimed at easing the burden on small businesses of increasing the minimum wage sailed through the Senate’s tax writing committee.
All told, the Senate measure would provide about $8 billion in tax incentives for small biz. The legislation includes the following components:
* Work Opportunity Tax Credit.
* Expensing.
* Leasehold Improvements.
* Cash Method of Accounting.
* S Corp Reforms.
* Certified Professional Employer Organizations.
Although most recent research has focused on federal taxes, state tax policies should not be left unexplored. More facts and developments every entrepreneur should know…
Picture by No Government Cheese.
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