AboutRichard Fritzler Expertise Specializing in Business and Corporate taxation. Comparing the advantages and requirements of different business entities, such as Sub-S Corporations, LLC`s, Partnerships (Both Limited and General), Doing Business as a Sole Proprietor, or Using a C-Corporation. Issues regarding K-1 distributions, 1040, schedule C, 1120, 1120s. Are you considering domiciling a Corporation in a low tax state? I can review the benefits and misinformation that exists.
Experience I have been in the business of assisting business owners in reducing their taxes and liability since 1986. The company is Owelesstax, incorporated, at www.owelesstax.com
Organizations National Small Business Owners Association. Publications Contributing author to "The Corporate Standard Newsletter".
Publications Contributing author to "The Corporate Standard Newsletter".
Question My question is somewhat loaded in its content. My brother and I formed a partnership about 7 years ago and opened a construction business. I would like to know if the partnership structure is the best for us to lessen our tax burden. Every year we seem to get hammered come tax time based on our income for the year and the profit the business has made, as well as paying the self-employment tax. The second part of my question regards a part-time job that I have recently begun delivering newspapers on a motor route. I took the position as a result of our business losing much of the overtime that we were used to for the last couple of years. Based on the construction business I have already is there a way in which to handle the additional income from the paper route which would lessen my tax burden on that income. My goal is to provide for family and also pay my fair share of taxes as a American citizen, it just seems the harder you work the more taxes you are obligated to pay. Any direction on these issues would be greatly appreciated.
Answer You are right, you are getting hammered, you are right, self employment tax is a big bite out of the spendable dollars.
No, a partnership is not a good idea.
It is not a good idea for tax purposes;
It is not a good idea for liability purposes;
it is not a good idea for administration purposes;
In fact you will find that generally it is considered the worst business entity available.
You are paying ALL the personal taxes on ALL the money; and personal taxes are terrible. But you already know that.
Don't feel bad, there are lot of businesses that have started and are running without the best advice at start up.
Let's see what might be the best business entity for you as a successful business (I use successful business here because if you were failing and losing money, you wouldn't have any taxes to pay).
Name for me the 3 most successful businesses that you can think of.
Are they partnerships?
Are they LLCs?
Are they S-corps?
