4 small business tax mistakes (and how to solve them) - Wave 2025

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Small Corporate Businesses There is no minimum income you have to meet before your small corporation is taxed. Every dollar it earns (after deductions and credits are factored in) will be taxed at 21%. Corporate tax rates also apply to limited liability companies (LLCs) who have elected to be taxed as corporations.
An LLC can avoid double taxation by electing to be taxed as a pass-through entity. If the LLC has just one member, that owner can be taxed as either a disregarded entity ( and pay business tax on their individual return) or an S Corporation. Either will help them avoid double taxation.
At the federal tax level, LLCs are considered pass-through entities. This means that LLCs (as well as sole proprietorships and S-corps) are not taxed on the entity level. Rather, any income generated by the LLC is passed to the business owners who then pay taxes on that business income on their personal income return.
limited liability company, for examplecan have an impact on its taxes. Employ a Family Member. One of the best ways to reduce taxes for your small business is by hiring a family member. Fund a Retirement Plan for Yourself and Others. Save Money for Healthcare. Change Your Business Structure. Deduct Travel Expenses.
You must file a return if you earn $400 or more in net earnings from your business. Net earnings equal taxable business income minus allowable business deductions. Was this topic helpful?
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10 Smart Small Business Tax Strategies That Will Save You Money Make the most of your home office deductions. Defer income to reduce your taxable income. Be proactive about procurement and depreciation. Maximize contributions to your retirement plan. Pay down your debt. Consider making your business an LLC.

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