Starting your business, you should consider a number of issues related to taxes. Business tax planning is a complex field and it is important to understand three main topics:
• Tax consequences when a business is formed
• Tax consequences when a business is already generating profit or loss
• Tax consequences of business distribution
What are the tax implications of starting a business?
When a business is formed, the owner, as a rule, transfers cash or property to the Business in exchange for a share in the business. It is important to understand the possible tax consequences of this exchange. The tax regime varies depending on the type of organization you choose. In addition, you need to know about the concept of “loading” and the tax consequences of transferring a property encumbered with obligations to a corporation.
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Tax consequences if a business makes a profit or loss
The tax regime for income or loss varies depending on the type of legal entity you choose.
Some enterprises themselves pay taxes on entrepreneurial income, while others act as intermediaries or transit organizations, forcing their owners to pay taxes on entrepreneurial income.
Tax Consequences of Business Distribution
The tax distribution of a business also varies depending on the type of legal entity you choose.