The changing landscape of the US tax code continues to create tailwinds for the business owner. Today, when it comes to earned income, the amount you make may matter less as compared to how you make it giving rise to more small businesses. With the massive surge toward small business ownership will be an increased need for qualified small business knowledge.
There are a number of common mistakes many founders make that can destroy everything they worked so hard to achieve. Most occur when there is some business success. Some mistakes are made out of ignorance during the initial filing process with the Secretary of State and others are the result of failing to finish the process.
When you are just an investor in an S-Corp, ostensibly you do not work for the business and you do not participate in its management as an officer. You are therefore considered limited in your liability and your income from the business based on your ownership share of the business is usually considered passive income.
As an officer and shareholder in an S-Corp, some of your income is considered earned income subjecting it to higher taxes, while some income can be considered passive income subjecting it to lower taxes. This post looks at how getting paid affects the officer, corporation, and shareholder to achieve a maximum after tax return.
How you pay yourself as an owner depends on the type of entity you are and how many owners there are. This post lays the groundwork and defines a few terms that should help demystify how entities pay the owners of the business.
Retirement accounts qualify for special tax treatment by the IRS. One of the most common retirement accounts is an IRA, where pretax dollars are deposited into an account and allowed to grow tax deferred. These funds are designed to create income during retirement and are subject to premature distribution penalties if the funds are used before the age of 59.5, except [...]
The term “Angel Investor” comes from the theater, where a wealthy investor often came to the rescue and provided the money necessary to bring a play into production. Angel investors are generally entrepreneurs that had a profitable exit event and were able to cash in on their companies' successes. Many of these successful [...]
Robert Kiyosaki, the author of Rich Dad Poor Dad, uses a model he calls the Cash Flow Quadrant to explain different ways income is generated. Being a business owner is different from being self-employed in that as a business owner you hire employees to do the work. That is not to say that the business [...]
Many new business owners make several mistakes during and after the registration process that can come back and bite them later.One common formation error is that the registering agent fails to include an entity identifier in the name, such as LLC or Inc. Once registered, many LLCs fail to produce an operating agreement. Many S-corps fail to adopt bylaws, appoint a board [...]