Business vs. Personal Taxes

Tax season is upon us and whether you’re a business owner or simply employed there are different ways to file. We all must pay taxes in one way or another, however, when it comes to business taxes and personal taxes, there are some key differences to look out for when tax season comes around.

Businesses taxes explained-

If you are a business owner, then the type of business you are running will determine what type of tax you will have to pay. The federal income tax is “pay-as-you-go,” meaning that a business must pay a tax on what it earns as it generates income throughout the year. In addition to more tax forms to select from, the responsibility of handling business taxes also comes with additional filing deadlines. There are also far more business tax deductions than personal write-offs.

Personal taxes explained-

Personal income tax is imposed by a government on an individual’s income. In other words, the income tax is payable on an employee’s wages and salaries. Individual income taxes are “progressive,” meaning tax rates increase as a taxpayer’s income increases, resulting in higher-earners paying a larger share of income taxes than lower-earners.

No matter if you’re an individual filer or you own multiple business entities that require numerous filings, it’s a good idea to work with an accounting professional to ensure you’re staying up to date on new tax laws—and to help you save more of your hard-earned money.

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Freya Allen Shoffner, Esq.
Shoffner & Associates
Counselors to Small Business and Families.

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