Business taxation basics
Many taxpayers don’t clearly understand how their share of business profits is taxed, and how the tax affects their personal tax liability. There are many ways you can structure your company, and that causes confusion for taxpayers.
Personal return components
Plan in advance
The best way to address all of these issues is to plan for your tax liability in advance. Review your tax return for the prior year, so that you understand how your tax liability was calculated. If something unusual happens during the year, such as the sale of an asset for a gain, document the transaction so that you can locate it at tax time.