Income Tax
What is income tax?
Income tax is a tax that businesses and individuals pay on income they earn during a given period, usually a year. Business owners calculate their taxable income after accounting for eligible business expenses and deductions.
For example, a business's revenue and expenses:
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Revenue: $200,000
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Business expenses: $80,000
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Taxable business profit: $120,000
Income tax for a business owner would not be applied to the entire $200,000 of revenue. Instead, the tax calculation starts with the profit/income that is taxable, after allowable deductions and other adjustments.
Why is understanding income tax important?
Understanding your income tax obligations can help you plan ahead, manage cash flow, and avoid unexpected tax bills. Your tax responsibilities can vary depending on your business structure, income, expenses, and location.
Income tax affects decisions such as:
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How you structure your business — sole proprietorship, partnership, corporation, etc.
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Which business expenses you deduct
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How much money you set aside for taxes
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Whether you make estimated tax payments
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How you compensate yourself
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When you recognize income and expenses
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Whether certain tax credits or deductions are available
What can Lighthouse Consultants offer?
Let us help you navigate income tax as a business owner, someone with growing income, or with growing assets in your possession.
Tax planning and preparation shouldn't be an afterthought. Our experienced CPA team provides personalized income tax services for individuals and business owners, helping you navigate complex tax requirements, maximize available deductions and credits, and make informed decisions year-round.
From annual tax preparation to proactive tax planning, we're here to help you stay compliant yet make the most of your tax situation.