Tax corporate Essay Example | Topics and Well Written Essays - 250 words

Tax corporate - Essay Example For many small businesses such as Northwest Brand Inc. often all major business investors are employees of the firm (Thomas and Keith, 1994). The business can avoid double tax through distributing their earnings to the corporation’s staff in form of wages and fringe benefits. Although the individual workers have to pay income tax, the Northwest Brand Inc Corporation is able to deduct employee’s wages and other benefits paid to its workforce in form of business expenses hence firm can comfortably avoid paying tax on the expense amount. Similarly, small businesses distributions to employees who are owners of the business accounts for all of the company’s income, ultimately nothing are left that can be subjected to corporate tax. In a situation where the company’s income is left in the business, this will normally be retained in order to finance future business expansion. Thorough this amount will be subjected to corporate tax. The charged rate is often lower compared to those paid by individuals. Larger corporations are unlike small businesses, are more likely to have investors that are not employed by the business. Under this circumstance, the firm can not distribute corporate profits to them as part of their remunerations among other business related incentives, which are able to avoid double taxation as it can be done under businesses that owners are among the workforce. However, they are able to avoid double taxation just like the small businesses (Ted and Robert, 1999). A typical case can be a non-active shareholder is referred to as the business consultant. Since payment to business consultants are tax-deductible expenses rather business expenses rather than dividends. It is may be difficult to include business owners to the corporation’s payment arrangement, for instance through including investors as part of the business directors. In order to obtain relief business investors from double tax, use tax-relief saving