taxes(6/0)
Business is responsible for most tax collection
Many nations use business as the principal means of tax collection. Two reasons exist for this. First, the effect of most taxation does not depend on who collects it. In economic terms, incidence refers to the impact of taxes on a segment of the economy. Split into “formal” and “effective,” the study of incidence seeks to determine who actually pays for taxes. What economists have discovered is that, while the party formally responsible for tax may differ, the effective responsibility rests upon the same economic segment.…
Indirect taxes tend to be regressive
When calculating the impact of taxes on a nation’s population, an economist looks for the distributional incidence among segments. While every nation differs in the way their taxes are gained - some receive a majority via direct income tax while others through an indirect sales tax - in general, direct taxes are progressive and indirect taxes are regressive. What this means for a distribution of the nation’s population is that the poorest population are less impacted than the richest in a progressive tax scheme, while the inverse is true in a regressive tax scheme.…
Pay taxes and honor the government
💬 Then the whole assembly rose and led him off to Pilate. And they began to accuse him, saying, “We have found this man subverting our nation. He opposes payment of taxes to Caesar and claims to be Messiah, a king...” Pilate called together the chief priests, the rulers and the people, and said to them, “You brought me this man as one who was inciting the people to rebellion.…
Choose a corporate identity carefully
Choose the corporate identity that makes legal and tax sense for your circumstances. In the United States, five legal entities are typical among businesses: sole proprietorship, partnership, C corporation, S corporation, and LLC. Each has its tax benefits and hindrances depending on the circumstances of the business. Sole proprietorships are simple to stand up and easy to incorporate into a person’s existing tax documents. Instead of separate tax preparation, a sole proprietorship adds a Schedule C form to their 1040 ((Clydebank, pg.…
Consider sole proprietorship for a lean startup
Consider a sole proprietorship with liability insurance over a Limited Liability Corporation (LLC) for a lean startup. When an entrepreneur first sits down to consider how to incorporate a business, the technical details may bore her to tears. That is, until she reads about liability and begins to imagine what horror stories may apply to her. Lean startup entrepreneurs want runway to iterate on their business model until a product/market fit is achieved.…
Lean startups leverage tax deductions
Tax deductions are crucial to the launch of a lean startup. Second only to a profitable business model in financial importance, tax deductions are crucial to a lean startup. Business taxes can absorb a business' profit for months - Clydebank estimates that it takes a full quarter for a small business to generate enough profit to exceed their tax responsibilities (loc. 576). For a startup with limited fund runway, taxes can quickly shorten the duration an entrepreneur has to iterate on their business model.…