What Is “ Statute of limitations ”?
05/28/2026
The statute of limitations is a legal time limit established by the IRS for taking certain tax-related actions. It defines exactly how long the IRS has to audit your return or collect unpaid taxes, and how long you have to claim a tax refund. Once this time period expires, neither you nor the IRS can
What Is “Startup cost”?
05/28/2026
What Is a Startup Cost? Startup costs are the expenses you pay or incur to create an active trade or business, or to investigate the possibility of creating or acquiring one. These are “pre-opening” expenses that happen before your business officially starts its operations. 1. Meaning of “Startup cost” In plain English, startup costs are
What Is “ Sole proprietor ”?
05/28/2026
A sole proprietor is an individual who owns and runs an unincorporated business by themselves. From a tax and legal perspective, there is no separation between the owner and the business. This is the simplest and most common business structure for freelancers, gig workers, and independent contractors in the U.S. 1. Meaning of “ Sole
What Is “ Single-member LLC ”?
05/28/2026
A single-member LLC (Limited Liability Company) is a legally registered business structure that has only one owner. From a legal standpoint, it protects the solo owner’s personal assets from business debts and lawsuits. From a federal tax standpoint, the IRS automatically treats it as a “disregarded entity,” meaning the business’s profits and losses pass straight
What Is the “Simplified home office method”?
05/28/2026
What Is the Simplified Home Office Method? The simplified home office method is an optional way to calculate the tax deduction for the business use of your home. It allows you to claim a flat dollar amount per square foot of your office space instead of tracking and allocating actual home expenses like utilities, rent,
What Is “Shareholder”?
05/28/2026
What Is a Shareholder? A shareholder is an individual, company, or institution that owns at least one share of a corporation’s stock. In the eyes of the IRS, being a shareholder means you are a partial owner of a business and may be entitled to a portion of its profits and a say in how
What Is “ Self-employed individual ”?
05/28/2026
A self-employed individual is someone who earns a living by working for themselves rather than working as a traditional employee for a company. In the eyes of the IRS, you are considered self-employed if you operate as a sole proprietor, an independent contractor, or a member of a partnership. Being self-employed means you are your
What Is “Section 163(j) limitation”?
05/28/2026
What Is Section 163(j) limitation? The Section 163(j) limitation is an IRS rule that caps the amount of business interest expense a taxpayer can deduct on their tax return. Generally, it limits the deduction to the sum of business interest income, 30% of adjusted taxable income, and floor plan financing interest. 1. Meaning of “Section
What Is “ S corporation ”?
05/28/2026
An S corporation (S corp) is a special tax status that allows a business to pass its income, losses, and credits directly to its shareholders’ personal tax returns without paying federal income tax at the corporate level. This structure is frequently used by small business owners to avoid the “double taxation” found in standard corporations
What Is “S corp election”?
05/28/2026
What Is “S corp election”? An S corp election is a formal request made by a small business to the IRS to change how it is taxed. Instead of being taxed as a standard corporation or a default LLC, the business chooses to pass its income, losses, and credits directly to its shareholders. This “pass-through”