| Sole Proprietorship |
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How does a sole proprietor legally access tax relief?
A sole proprietor is taxed the most, has the fewest deductions, is audited the most and is the least protected.
So how does (s)he access tax relief? By entering the realm where tax relief exists; the land of corporations.
Why is this? It's pretty simple. Congress passes tax laws; and we know corporations are the major beneficiaries of any tax breaks. When was last time you wrote a check to your lobbyist? Beyond that, Congress knows business is the engine that makes our whole system work; it creates the jobs that pays the wages that are the real source of taxes. According to IRS data 45.5% of the revenue taken in by the government comes from personal income taxes and 43.3% comes from payroll taxes (FICA and Medicare). That's 88.8% of government funds coming through the paycheck. Corporations, on the other hand, account for just over 8%.
The sole proprietor accesses tax relief, legally, by arranging their affairs to play on the 'corporate' field. Corporations are the only business entity that has it's own tax bracket. All others, partnerships, Limited Liability Companies and S Corporations pay no taxes; but pass the profits through to the owners.
We salute the sole proprietors of our country. They have taken the step to enter the world of business; the world of risk and reward. Many sole proprietors find themselves in this position by default. They start doing something that generates cash flow and before they realize it, their in business. Things get done by the people who "Fire, Aim, Fire" rather than "Get Ready, Aim, Fire." That's what many sole proprietors do.
If you have more revenue than expenses your are making a profit. If you're in business as an individual you are paying too much in taxes.
I'm not telling you something you don't know; you're living it. That's why you are looking into ways to cut your taxes; trying to find answers that make sense and aren't full of 'marketing hype.' |
