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Help explain the exciting world of tax law!

JebusUDJebusUD Registered User regular
edited November 2008 in Help / Advice Forum
So, Buisness taxes, specifically small buisness taxes, are calculated on net profits, correct? As in, only net profits are taxed.

Say, if I make 250k and have 8 employees, lets say I only profit 40k after payroll. The 40k is what would be taxed?

If anyone knows of a site that explains this in simple detail it would be very helpful.

JebusUD on
You haven't given me a reason to steer clear of you!

Posts

  • taerictaeric Registered User, ClubPA regular
    edited November 2008
    I believe there is a payroll tax you would also be paying, but overall that idea is correct.

    I don't know of any sites right off, though. I can ask some accountant friends.


    Edit: That is to say, I may be able to dig up something if nobody can find something for you quickly.

  • shugaraeshugarae Registered User regular
    edited November 2008
    JebusUD wrote: »
    So, Buisness taxes, specifically small buisness taxes, are calculated on net profits, correct? As in, only net profits are taxed.

    That's the general gist of it... it also depends on how your business is set up (proprietorship, partnership, LLC, LLP, C-corp, S-corp, etc.).

    Also, there may be additional items that are included in net income that are not taxable (tax-exempt interest income, some life insurance proceeds, etc), or items that may be calculated differently for tax purposes and reporting purposes (depreciation, etc).

    As for a website that explains it... www.irs.gov. Download a tax form (the ones that's right for your type of business) and its instructions and try to fill it in. It's not really as hard as people make it out to be, and you'll learn a lot. :^:

    Omeganaut class of '08. Fuck Peggle.
    The Best in Terms of Pants on JCCC3
  • JebusUDJebusUD Registered User regular
    edited November 2008
    Thing is, I don't have a business, I just have an argument. Somehow they believe that the tax is calculated on Gross.

    I've been trying to find somthing that explains it as simple as possible.

    You haven't given me a reason to steer clear of you!
  • shugaraeshugarae Registered User regular
    edited November 2008
    In that case... http://en.wikipedia.org/wiki/Income_tax

    Very first paragraph:
    ...corporate income taxes often tax net income (the difference between gross receipts, expenses, and additional write-offs).

    Omeganaut class of '08. Fuck Peggle.
    The Best in Terms of Pants on JCCC3
  • YourBuddyYourBuddy Registered User
    Thing is, I don't have a business, I just have an argument. Somehow they believe that the tax is calculated on Gross.

    I've been trying to find somthing that explains it as simple as possible.

    Who is they?

This discussion has been closed.