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Showing posts with the label Business formation

Day 7 – How to Hire Your Kid Legally — And Save Taxes

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  Day 7 – How to Hire Your Kid Legally — And Save Taxes Hiring your child might sound like a sentimental idea, but it’s actually a strategic tax-saving move —if done right. The IRS allows business owners to hire their minor children under certain conditions, offering both tax deductions for your business and income tax benefits for your child . Here's how to make it work legally and efficiently. ✅ Why Hire Your Child? 1. Your Business Gets a Deduction Wages paid to your child are a legitimate business expense. That means your business income (and tax liability) goes down. 2. Your Child May Owe Zero Taxes As of 2025, a child can earn up to $14,600 (the standard deduction) without paying any federal income tax— as long as it’s earned income (i.e., wages, not gifts or allowances). 3. No Payroll Taxes for Some Businesses If your business is a sole proprietorship or a partnership where both partners are the child’s parents , and your child is under 18 , then: No Social S...
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πŸ“… Day 4: Sole Prop vs. LLC vs. S-Corp – Which Saves More?

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  πŸ“… Day 4: Sole Prop vs. LLC vs. S-Corp – Which Saves More? Choosing the right business structure isn’t just a legal decision — it’s a tax-saving strategy. While all three let you run a solo business, they come with different tax treatments, paperwork, and profit potential. Here’s what you need to know: 🧾 1. Sole Proprietor Default status for most freelancers and small business owners. ✔ Easy to set up, no formal registration ✘ You pay self-employment tax (15.3%) on all profits ✘ No legal separation between you and the business ✅ Best for: Just getting started or low-income side hustles 🧾 2. LLC (Limited Liability Company) Gives you legal protection and some flexibility in taxation. ✔ Still simple to run, protects your personal assets ✔ Can choose to be taxed as a Sole Prop or an S-Corp ✘ Still pays self-employment tax unless you elect S-Corp status ✅ Best for: Growing businesses that want liability protection 🧾 3. S-Corporation (via LLC or Inc) Not a ...
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C Corporation vs. S Corporation vs. Partnership

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C Corporation vs. S Corporation vs. Partnership: Choosing the Right Business Structure When starting a business, selecting the right entity type is crucial for taxes, liability, and management flexibility. Three common structures— C Corporation, S Corporation, and Partnership —each offer distinct advantages and limitations. Let's break down their key differences to help you make an informed decision. 1. C Corporation (C Corp) Best for: Large businesses planning to raise significant capital or go public. Taxation: Subject to double taxation —profits are taxed at the corporate level, and dividends distributed to shareholders are taxed again on their personal returns. Ownership: Unlimited number of shareholders allowed; preferred by investors. Liability Protection: Owners (shareholders) have limited liability —their personal assets are protected from business debts. Management: Operates with a board of directors and officers, ensuring a structured leadership hierarchy. C...
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