Why Are You Operating As A Sole Proprietor?
- November 14, 2017
- Posted by: [email protected]
- Category: IRS, Taxes
I have written about this topic before, but I still find many small businesses operating as a sole proprietor. In my opinion, it is one of the worst ways to operate a small business if your goal is to save tax dollars. There are other ways to operate that are considered favorable tax treatment for small business. Keep in mind our main focus is helping small business brave the muddy waters of the IRS. You cannot call the IRS and find answers to your tax questions. You cannot call the IRS and ask them these specific questions;
Should I be a partnership?
Should I be a “c” corporation?
Should I be an “s” corporation?
Should I be an LLC?
These questions need to be answered because without proper guidance and full knowledge of each structure, you can easily pay a double tax. Furthermore, you need a professional that believes in tax strategy/tax planning and someone who is not simply an “order taker.” An “order taker” is what I refer to as a licensed professional who takes your information and completes a tax return without offering any advice on how to minimize your tax exposure.
What small business owners truly need is a tax professional that has integrity and experience. Finding that professional today is made easy via technology. You can check reviews with the Better Business Bureau, Yelp, Google, and many other online destinations. I always suggest interviewing them, sitting down face to face and then making your decision. Unless you enjoy reading tax law, you should rely on someone you trust that has the experience and longevity in the tax profession to advise you accordingly.
At our firm we have IRS Enrolled Agents and we have earned that right by taking the IRS’ three-part, six-hour exam—covering personal tax, business tax, & ethics. Follow this link to the IRS website for a short explanation on an Enrolled Agent. Only IRS Enrolled Agents can say they are tax experts, no other designation can make that claim.