You might think that your business is a low-profit business. But is it?
In this episode, Mike Jesowshek discusses vital financial concepts for small business owners, focusing on how businesses are taxed and the importance of understanding profit. He explains that profit is calculated as sales minus expenses and highlights the differences between pass-through entities and C corporations regarding tax implications. The episode also covers owner compensation methods, including owner's draws/distributions and payroll, emphasizing that owner's draws do not reduce business profit and, therefore, do not affect the taxable income.
[00:58] What is Profit in Your Business?
[02:04] Pass-Through entity
[05:15] How to Pay Yourself in Your Business
[08:53] How Does Tax Work?
[12:41] Quick Recap
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Key Quotes
"Your profit is very simply your sales minus your expenses." - Mike Jesowshek, CPA
"Owner's draws or distributions... they do not reduce the profit of your business." - Mike Jesowshek, CPA
"You're taxed on the profit of your business... that's going to be sales minus expenses equals profit." - Mike Jesowshek, CPA
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Podcast Host: Mike Jesowshek, CPA - Founder and Host of Small Business Tax Savings Podcast
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Podcast Website: https://www.TaxSavingsPodcast.com
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To find out more on this topic and many others visit our website at www.TaxSavingsPodcast.com.
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