When a corporation makes a profit, it’s subject to corporate income tax. When it then distributes that profit to shareholders as dividends or buybacks, it gets taxed again as dividends or, eventually, capital gains.
Taxpayers can deduct expenses paid to run a business.
Expenses are described as either “ordinary” or “necessary.” An ordinary expense is one that is common and accepted in an industry. A necessary expense is one that is helpful and proper for a trade or business.
Almost all businesses are small.
The vast majority of U.S. businesses are small, whether they are pass-through businesses or C-Corporations. Whether business is a pass-through partnership or an S-Corporation, or whether it is a C-Corporation is not a good indicator for the size, complexity, or even number of shareholders of a business.
Pass-Through businesses normally pay lower tax rates than C-Corporations.
Corporate income is often taxed twice; once at the entity level, and again on the individual level when profits are distributed to shareholders as dividends.
You must setup a recordkeeping system.
Supporting documents must clearly show your income and expenses which includes sales slips, paid bills, invoices, receipts, deposit slips, canceled checks, and bank statements. It is important to keep these documents because they support the entries in your books and on your tax return. You should keep them in an orderly fashion and in a safe place.