February 23rd, 2016.
The American tax system can be confusing and overwhelming, not only to new citizens but also to Americans! Because of this, it’s important that you work with an accountant who not only takes care of your taxes, but also takes time to explain how the system works.
I can’t tell you how many people come to me completely confused about their taxes... especially if they’re self-employed. If you have your own business, you can save thousands of dollars each year in taxes simply by incorporating.
When you turn your business into an S Corp, you’ll be able to use a benefit of Small business corporation on your personal taxes! Everything your business made will show up on your personal tax return! See line 17 of the 1040, which is rental real estate, royalties, partnerships, S corporations and trusts. Click here for a list of common business expenses.
Click here to take a look at this sample 1040 I created to demonstrate how it works. You’ll see that the individual who made $20,000 paid $3,720 in federal taxes while the incorporated business which made as well $20,000.00 paid only $998 in federal taxes. The difference is $2,722 this is huge savings if you do it RIGHT!
If it’s time for you to incorporate your business, don’t do it alone. Call our office and get it done right the first time and save yourself headache and expense down the line.
Look for my email next week, when I’ll talk about which business expenses you should be tracking to get a tax deduction.
Please call (847) 221-9058 or SMS to (224) 676-3577 for an appointment.
Ilona Dovidaitiene, EA
Enrolled to practice before the IRS