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Earning Income as a Nonprofit Corporation

Nonprofit corporations, by definition, exist not to make money but to fulfill one of the purposes recognized by federal law: charitable, educational, scientific or literary. Under state and federal tax laws, however, as long as a nonprofit corporation is organized and operated for a recognized nonprofit purpose and has secured the proper tax exemptions, it [...]

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How Limited Liability Companies (LLCs) Are Taxed

A Limited Liability Company (LLC) is not a separate tax entity like a corporation; instead, it is what the IRS calls a “pass-through entity,” like a partnership or sole proprietorship. All of the profits and losses of the LLC “pass through” the business to the LLC owners (called members), who report this information on their [...]

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How Corporations Are Taxed

Corporations are taxed differently than other business structures: a corporation is the only type of business that must pay its own income taxes on profits. In contrast, partnerships, sole proprietorships and limited liability companies (LLCs) are not taxed on business profits; instead, the profits “pass through” the businesses to their owners, who report business income [...]

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How Partnerships are taxed

For many small businesses, paying income tax means struggling to master double-entry bookkeeping and employee withholding rules while ferreting out every possible business deduction. For partnerships, paying taxes also involves understanding difficult terms like “distributive share,” “special allocation” and “substantial economic effect.” Here, we explain the basics of how partnerships are taxed.
How partnership income is [...]

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How Sole Proprietors are Taxed

As a sole proprietor you must report all business income or losses on your personal income tax return; the business itself is not taxed separately. (The IRS calls this “pass-through” taxation, because business profits pass through the business to be taxed on your personal tax return.)
Here’s a brief overview of how to file and pay [...]

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Tax planning in a loss situation

As you develop your business plan, you’ll need to estimate the taxes you will owe.
Simple assumption
For planning purposes these are based on simple mathematics. Your estimated tax (usually in the profit and loss) is the product of multiplying pre-tax profits by your anticipated tax rate. This simple, powerful estimator is excellent in most cases. You [...]

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