Small Business Tax Guide

Demystifying the Tax Maze

From Sole Proprietorships to C-Corps. Explore how structure impacts your bottom line, liability, and filing requirements.

The Entity Simulator

Adjust the sliders below to see how your estimated tax burden changes depending on your business structure.
*Estimates based on simplified 2024 federal brackets. State taxes vary.

1 Input Your Numbers

$100,000
$20k $500k
$50,000

Note: S-Corps require a "reasonable salary". The rest is taken as distributions (saving SE tax).

Estimated Tax Liability

Effective Take Home Pay

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Analysis

Calculating...

Deep Dive: Business Structures

Understanding the mechanics, pros, and cons of each entity type. Select a tab below to explore.

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Sole Proprietorship

The default status. You are the business.

How Taxes Work

Income and expenses are reported on Schedule C attached to your personal Form 1040. You pay income tax at your individual bracket rate.

  • ⚠️Self-Employment Tax: You pay 15.3% (SS & Medicare) on ALL net profit, not just what you withdraw.
  • ✓Simplicity: No separate tax return required for the business.

Key Forms

Form 1040 Main Return
Schedule C Profit & Loss
Schedule SE Self-Employment Tax
Form 1040-ES Quarterly Payments

Common Deductions & Strategy

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Home Office

Must be used regularly and exclusively for business.

Simplified method: $5/sq ft (max 300 sq ft).
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Vehicle Use

Track mileage or actual expenses.

Standard Rate (2024): 67 cents per mile.
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Meals

Business meals with clients/prospects.

Typically 50% deductible. Keep receipts!
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Health Insurance

Self-employed health insurance deduction.

Deducted on Form 1040 Schedule 1 (Adjusts AGI).

Simple Decision Logic

Just Starting /
Low Risk?
Sole Prop
↓
Need Protection /
Partners?
LLC
↓
Profit > $60k?
LLC + S-Corp Election
↓
Raising VC Money?
C-Corp