Frequently Asked Questions
Attorneys at The Rigsby Ball Law Group in Lexington, Kentucky strive to keep our clients informed through every phase of their business or financial life cycles. Let us introduce ourselves to you with some useful information in these frequently asked questions. We look forward to nurturing your business with you soon.
- Are my business taxes reported the same as everyone else's business taxes?
- Can I avoid payroll taxes by hiring independent contractors instead of hiring employees?
- What are capital gains taxes?
- What are the tax consequences of buying or selling a business?
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Are my business taxes reported the same as everyone else's business taxes?
No, the rules for business entities differ significantly. Sole proprietorship owners report income and expenses on their individual tax returns on Schedule C. A general partnership uses Schedules K-1 to report income and expenses to its partners. Tax payment is made through the partners' individual returns. The IRS taxes corporations unless they are established as Subchapter S corporations. Most limited liability companies are taxed as partnerships and report taxes in the same manner as a general partnership, though some may be treated as corporations.
Can I avoid payroll taxes by hiring independent contractors instead of hiring employees?
Though the IRS and local tax collectors always pay closer attention to your filings, the answer is, in certain cases, yes. Tax collection authorities use numerous factors to determine whether your workers are really employees rather than independent contractors. Let the experienced attorneys of The Rigsby Ball Law Group assess your business situation and guide you accordingly.
What are capital gains taxes?
Capital gains are calculated as the difference between a capital asset's cost or basis when you acquired it compared with its price when you sell it. The calculations and applicable rates can become complicated and usually factor previous deductions taken for depreciation or amortization of an asset's value.
What are the tax consequences of buying or selling a business?
One of the biggest business issues arises at the purchase or sale of a business. The seller can expect to pay tax on most business sales. Sellers can minimize tax by accepting installment payments, by making a like-kind exchange of assets, through certain reorganizations or by qualifying the profit as a capital gain instead of ordinary income. Generally, the costs of acquiring a business are capitalized, though buyers need explore whether they can qualify payments as expenses and if not possible, to amortize or depreciate the costs or assets as soon as possible.