Business Economics Essay
The Intention of every business-to make money
*Basics to becoming wealthy and remaining wealthy 1. Spend wisely 2. Create multiple sources of income (several ways to make money) 3. Invest you money to make more money 4. Pay as little taxes as possible that is legal
Spend Wisely- Credit cards are a great way to keep track of expenses and keep all expenses in one place. But, you must pay them off every month or they are bad.
Multiple sources of income- gives greater chance of keeping money. When money is put in different areas like a business, real estate, stock market, etc., you have a better chance of keeping your money because if one thing goes bad, you still have the other …show more content…
*Business Credits from the IRS Energy Credit Research Credit Work opportunity credit
The IRS and state tax-gives specific codes to pay taxes
*Types of taxes 1. Estate tax-taxes paid after someone dies (Trust helps to avoid these taxes) 2. Income tax-Tax on profits. Businesses pay less than individuals 3. Capital gains
*Tax Returns and how to avoid an audit by the IRS 1. Don't use round numbers-shows you are guessing 2. File an extension- less likely to get audited 3. Particular targets-set up the right business or entity to file taxes under 4. Paper vs. Electronic- Electronic filing lets the IRS have all the information. Paper only gives the IRS some of the information so it is better.
Tax return date is April 15, but many corporations use September 15
Tax year-Calendar year is January to January, Fiscal year is what you pick( Example: May to May).
*Accounting methods a business should use 1. Cash method 2. Accrual method-if there is an inventory 3. Hybrid method-uses cash and accrual method
Tax bracket- What bracket you fall in determines the percent of tax you pay. Changes from year to year. Want a low tax bracket.
All income is checked with other tax documents so must put it down correctly.
*3 ways of