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What are the tax advantages of a sole proprietorship?

asked by SamZ (19)

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Tags:  advantage  business  taxes

answers

The advantage of operating a business as a sole proprietorship rather than a corporation is you avoid double taxation. Corporate profits are taxed at the corporate level. The owner also pays personal taxes as well when he cashes in on his investment in the form of dividends or capital gains.

7 votes

The tax benefits available in sole proprietorship are:- The business income is treated as your personal income. You can deduct your business losses to the extent of your total income.

  • S-corps can be slightly better than a sole proprietorship if you are making a reasonable amount of money. you pay yourself a salary and pay regular taxes on that. Any additional profit goes to you as dividends and you dont have to pay medicare tax (3%) on that component.
    posted by elsewhen (613)
4 votes

Sole proprietors do not have to pay corporate income taxes. Sole proprietors can also deduct business losses from their total income from all sources.

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posted by jennyv8 (124)
3 votes

Sole proprietorship's tax advantage is that the profit or losses can be recorded on a 1040 after completing Schedule C and they donot have to pay corporate taxes.

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posted by anthony (41)
3 votes

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