Taxes You Owe
1. The Federal Government
1. will want to collect Income Tax.
2. The State in which your business is operating
1. will want to collect Income tax.
2. will want to collect Sales Tax (also known as "Sales and Use" tax, more on the difference below)
3. The County in which your company operates
1. will want to collect an additional sales tax
Bear in mind that all the taxes listed above are collected from your company, not from you.
In addition to any taxes collected from your company, and since the ultimate goal of your company is not to make money for itself but to transfer money to you, whatever earnings money the company passes on to you will cause you to be assessed income tax, both at the Federal and State levels. Some authors call this situation "double taxation", but there are ways to avoid or mitigate it.
Aside from the legal requirements to do so, it is a good thing to form a company. Companies enjoy tax advantages individuals don't, namely: they are taxed after their expenses. What you can deduct from taxes as an individual is much more limited.
1. The Federal Government
1. will want to collect Income Tax.
2. The State in which your business is operating
1. will want to collect Income tax.
2. will want to collect Sales Tax (also known as "Sales and Use" tax, more on the difference below)
3. The County in which your company operates
1. will want to collect an additional sales tax
Bear in mind that all the taxes listed above are collected from your company, not from you.
In addition to any taxes collected from your company, and since the ultimate goal of your company is not to make money for itself but to transfer money to you, whatever earnings money the company passes on to you will cause you to be assessed income tax, both at the Federal and State levels. Some authors call this situation "double taxation", but there are ways to avoid or mitigate it.
Aside from the legal requirements to do so, it is a good thing to form a company. Companies enjoy tax advantages individuals don't, namely: they are taxed after their expenses. What you can deduct from taxes as an individual is much more limited.
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