18 Mar 2013

What About the Taxes on the Real Small Business Owners

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Most small business owners do business as Sub S corporations or other pass through entities. Changing the corporate tax rate will not help them.

I know that most of my clients and business acquaintances do business in a form that passes net income through to their personal 1040’s where the tax is paid. But most of the political chatter we hear, view or read keeping talking about reducing corporate taxes. That will probably not have a significant effect on the small businesses whose tax structure is based upon their individual tax bracket. The two candidates position on this issues was recently raised in an AP article in the Washington Post http://wapo.st/JEeAq5. The article provides a quick analysis on the relative positions of Romney and Obama and how they will affect the actual taxes on small business owners with pass through income. The article concludes that under both candidates proposals, the big boys in C corps will get the biggest benefit.

It is pretty clear that despite the lip service, neither candidate is addressing the individual tax issues related to small business income. We all need to be alert, no matter what the election result, to review our business structure in the event of any tax changes. Assuming, of course, that Congress can ever agree on any.

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