ST Alpha - "There really should be very little difference between the small business owner's income and the net income of the business." (Reading a Post)

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There really should be very little difference between the small business owner's income and the net income of the business.

Posted by pmb (aka pmb) Oct 16 '08, 11:54

Typically a small business will be formed as an S corporation or LLC. The income of the business passes through to the owner and is only taxed at the owner's level. Expenses of the business net against the gross income. Effectively you pay taxes on the net income (after paying employees, rent, etc.) Even in a sole propietorship this would be the case.

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theoretically, I'd agree. In reality, I've seen what is actually income get passed off to other categories due to loopholes -- nm - crash davis Oct 16, 11:58 2
- Some people run some personal expenses through the business (to the extent they can show a business purpose). - pmb Oct 16, 12:03 1
  - I agree wholeheartedly with your IM. I was just saying that in my anecdotal experience, the 250K threshold will actually be a higher number than 250K -- nm - crash davis Oct 16, 12:05
but usually the owner would draw a salary -- nm - zeitgeist Oct 16, 11:56 1
- It doesn't matter. - pmb Oct 16, 11:58

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There really should be very little difference between the small business owner's income and the net income of the business.

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