Comment on Cheat Codes for Life I Know at 36 That I Wish I Knew at 26parentComments−d233yAnd then what happens when you want to pay yourself a salary? Aren't you essentially paying corporate tax rate and income tax on that amount? Maybe that doesn't apply for a sole proprietorship, but does it for a small business?−incomingpain3yPayroll is a deduction as well.You only pay taxes on profit. If you paid taxes on gross revenues it'd make running any business basically impossible.
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And then what happens when you want to pay yourself a salary? Aren't you essentially paying corporate tax rate and income tax on that amount? Maybe that doesn't apply for a sole proprietorship, but does it for a small business?
Payroll is a deduction as well.
You only pay taxes on profit. If you paid taxes on gross revenues it'd make running any business basically impossible.