Linda,
I think you need to find a new accountant.....
Ignoring the liabilities issues his tax advice is wrong.
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Originally Posted by Linda Buquet
Nope not true either that you need an LLC. You can be joe blow sole proprietor and deduct all your biz expenses. I'm still a sole proprietor and have a much bigger business than many affiliates do. You still do a schedule C for all biz income and expenses just like any other business.
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This is true to a point. For tax purposes you can deduct most expenses but not as many as a business could (mainly eating out and vehicular.
Quote:
Originally Posted by Linda Buquet
The main tax bene of incorporating is that you only pay tax on the salary you take out - not all the income that comes into the biz. (That's very simplified).
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If you pay yourself a salary out of an company then yes you will have to pay income taxes, ss, and Medicare as a company and individual. However, the IRS treats a sole-owner LLC as a sole-proprietor. An LLC offer pass through taxation, which means each year you can elect to be taxed as either an incorporation or on your personal income taxes.
So yes you would need to pay income axes on all "taxable" profits in a business. i.e Revenues - Expenses = Net income is "taxable" with a few exceptions.