Small Business Tax Options
Business can mean the financial condition or work of a company. A company owner may say: “my company is doing very well” or “my business is doing great”. In the context of management, the term can also be employed as a synonym for operation. As a verb, it denotes action or the accomplishment of an obligation. When used in the context of communication, business may refer to the act of speaking, bargaining or other types of social activity aimed at improving relations between people.
In business, there are two basic categories: individual enterprises and corporations. Individual enterprises, which include sole proprietorships, partnerships, mutual companies, partnerships and corporations, are the basic units of contemporary business. In these enterprises, profit is the main goal. Most individual businesses have no corporate structure. A profit motive is the driving force behind the operations of individual enterprises.
Corporations, which are publicly held companies, form the second category of contemporary businesses. In a corporation, the profits are usually reinvested in the enterprise. A corporation also separates the ownership of stock from the control of the business.
In the United States, state governments provide certain legal protections to individuals and small businesses. For instance, in Michigan a corporation has limited liability. Its owners are considered personal persons. A corporation is not considered a partnership unless one of its members is an associate. A special provision has been introduced to cover corporations that engage in sales of insurance.
Another advantage of a small business in Michigan is the lack of personal liability. A personal injury lawsuit can only be brought by a person who was acting in the course and scope of that person’s capacity as a business owner. Thus, in the case of a personal injury, the injured person can sue only the other party or parties responsible for the injury. Michigan law provides that if more than one person is responsible for the same injury then the lawsuits can be consolidated into one against the whole liable party.
Private corporations and limited liability companies are treated more like partnerships than as corporations by the Michigan courts. Although both types of corporations are considered separate legal entities, they are taxed the same way. Income taxes are levied on corporations and limited liability companies according to their annual income. In Michigan, income taxes are imposed on businesses and some personal actions may be tax-deductible depending on the circumstances.