Chapter_13_handout_Notes

Chapter_13_handout_Notes - HA 4422 Chapter 13 Sole...

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HA 4422 Chapter 13 Sole Proprietor No legal structure Could file a "Doing Business As" (DBA) Personally liable Tax aspects: File on Form 1040 Schedule C Can not deduct owners “pay” or fringe benefits on Sch. C Net income is subject to Self-employment tax (Net x .9235% x 15.3%) Net income adds into taxable income calculation Partnership 2 or more owners The general partners are personally liable for 100% Limited partners: can only lose investment can’t participate need at least one general partner Tax aspects: Conduit entity – income taxed at owner level File on form 1065 Cash to partners = draws Partners are not employees General partners pay S/E tax on profits Fringe benefits are treated like guaranteed payments Guaranteed payments are deductions – treat as if paying an outside self-employed person. Income to recipient. Corporation Form under state law Limited liability but often can’t get loans without personal guarantee Tax aspects: Corporation pays tax on its own income File on form 1120
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