> Date: Tue, 23 Apr 2002 11:26:50 -0700 (MST)
> From: Patrick Fleming EA <pfleming@infomagic.net>
> To: <plug-discuss@lists.plug.phoenix.az.us>
> Subject: RE: Consulting/LLC or Corp Experience
Hey, Patrick, thanks for the excellent response!
One clarification:
> > The main difference is that personal income is taxed BEFORE deductions are
>
> Not true. Income tax is applied to the amount left after subtracting
> personal and dependent exemptions, and your itemized or standard
> deduction- whichever applies.
>
> > applied, while business income is taxed AFTER expenses. Also, if you are a
>
I wasn't very clear here. What I was referring to was that Corp's generally
pay taxes on what's left after deducting various expenses, while individuals
usually pay (withholding) taxes on their income _before_ any deductions can be
applied (that's what employer withholding does).
The point is, this typically gives Corp's more flexibility in their capital
planning and spending than individuals often get using a Schedule C.
-David
(text/plain)