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revenue question: sole proprietorship

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mmmmdave
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revenue question: sole proprietorship

Postby mmmmdave » Mon, 24 Aug 2009 5:49 pm

Hi there,

I'm running a sole proprietorship here. I do consulting services for ad agencies. I have a simple question: is it better for me to keep my revenue within the company account, or transfer it immediately to my personal account as salary? In terms of taxes, which makes more sense?

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sundaymorningstaple
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Postby sundaymorningstaple » Mon, 24 Aug 2009 6:15 pm

If it's a sole proprietorship it doesn't make one iota of difference as it's all taxed together on your personal tax return.

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Strong Eagle
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Postby Strong Eagle » Mon, 24 Aug 2009 6:19 pm

A sole proprietorship is not independently taxable... it all ends up on your personal income tax form as income/loss. So, your question I think is answered by saying, "it is a wash". You must report both business and personal income on your tax return.

If you declare income paid as salary, it goes to your income line on your tax return, and your business income is reduced by your salary as an expense. So, if you earned $100,000 in your business and paid a $100,000 salary, you'd record $100K as personal income and $0 as business income.

If you hold back and don't pay a salary, then you had $100K as business income... still taxable at the same rates.

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Postby mmmmdave » Mon, 24 Aug 2009 9:40 pm

Got it. No loopholes for me!

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Strong Eagle
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Postby Strong Eagle » Mon, 24 Aug 2009 10:00 pm

mmmmdave wrote:Got it. No loopholes for me!


Correct. You need a private limited for more creative accounting. Seriously, within the law you have a great deal more flexibility concerning directors fees, dividends, deferred compensation, and the like.

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Pablito
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Postby Pablito » Fri, 04 Sep 2009 11:40 pm

Where I can see taxes for Sole Proprietor? Or it is all the same, some fixed percent?
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Postby sundaymorningstaple » Sat, 05 Sep 2009 12:22 am

Taxes are the same for Sole Prop as they are for wage earners. All taxed together on the same form and the same rates of taxes.

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Postby enterp » Sat, 05 Sep 2009 11:24 am

hi pablito

U can check the tax rates here.

http://www.iras.gov.sg/irasHome/page04.aspx?id=1190

For sole prop, refer to the resident individuals tax rates.


Pablito wrote:Where I can see taxes for Sole Proprietor? Or it is all the same, some fixed percent?


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