Everything A Student Has To Know About Small Business Taxes

Everything A Student Has To Know About Small Business Taxes

The first step to setting up a successful business is having an excellent business plan. This document provides information on your product or service idea, your start-up capital, structure, projections, and more. Students looking to achieve success have to conduct extensive research on every factor affecting their enterprise, and one such element is taxation. An excellent understanding of this monetary obligation to the state is essential for preparing a high-quality business plan.

As a college student looking to plan their business, this article provides you with crucial information about taxation that can set you on track to building a successful enterprise. Also, don’t forget that there are many entrepreneurial essay topics examples online which contain the basic points of building a small business from A to Z, definitely for your future enterprise you will need to study a lot of materials. If you are new or looking to expand your knowledge of taxation, we have you covered.

Why Many Students Are Planning Their Businesses Early

In today’s world, many graduates find it challenging to break into the workforce owing to the stiff employment competition. They face contention from their peers, established workers, the next graduates, and the growing shift to automation. Most students often opt to start a venture to rise above the competitive market. They leave preparing plans for the future, dream, or start a business plan right off from their universities.

What Students Need To Know About Small Business Taxes.

Here are crucial tips students need to know about small business taxes.

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Your Legal Structure Counts

There are four legal structures for businesses with all options having different tax implications. This set-up includes Sole proprietorships, S corporations, C corporations, and Limited Liability Companies. Here are what these legal structures bring to the table.

Sole Proprietorships

The most common structure in the US is sole proprietorships. Its ease of operation attracts small business owners. You assume all risks using this model but taxing is straightforward, as you can use your tax return to report income and losses. There’s also the advantage of deducting 20% of your net income from your taxable income.

S Corporations

This structure also enjoys the 20% net income deductible and has a shareholder limit of 100. All members of these groups must be US residents. S corporations rival the advantages of traditional corporations while offering more flexibility.

C Corporations

Most Fortune 500 operate using this structure, but small enterprises can still emulate it. There’s a double taxation system here, as both shareholders and the company both pay taxes. The former pays based on the dividends they earn from the company.


This structure is often the go-to option for many small ventures. You enjoy deductions on losses and don’t have to deal with double taxation. There’s also no limit to the number of shareholders you can take on in this structure. Such a setup makes it easier to generate capital and expansion.

Improve Your Knowledge By Taking A Business Course

You can improve your knowledge of taxation by taking on a business education course. This includes disciplines in marketing or entrepreneurship that can help you understand how to get the maximum possible tax returns and avoid mistakes.

Taking an entrepreneurship class isn’t the only avenue to improve your taxation knowledge as a business owner. You can also learn when you write and read a research paper, essay articles, graduation works, or preliminary business plans. It will definitely be useful for you to find entrepreneurial essay examples that can provide you with insights on structuring your enterprise for growth while appropriately accounting for taxes. Students looking to start a venture need to study to improve their skills as an entrepreneur.

Small Businesses Are Entitled To Multiple Tax Deductions

As a small enterprise owner, you can reduce your tax bill significantly thanks to deductibles. You can write off business expenses such as wages, asset depreciation, repairs, and more.

Startup Costs Are Also Deductibles

Few SME owners know that they can deduct business expenses right from the start. They wrongly assume that these deductions are only possible on established ventures. You can knock off expenses such as insurance, office supplies, business assets, and more from your final tax bill. The maximum allowable deduction stands at $5000.

Final Thoughts

Having your own enterprise can help you achieve financial success without delving into the competitive workforce. Many small enterprises often fail or function below optimal due to poor planning. Having a great understanding of US tax laws on SMEs can help you prepare a high-quality business plan for the future.

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