Question by sunnskye: Does a small business owner save taxes by including his own salary as an expense?
If the salary is included as an expense, then the income tax for the business is less, but of course, the owner has to pay his own income tax. So is it better to not pay yourself a salary and somehow finesse it so that you deduct everything and pay no income tax? References would really help here. Thanks!
Answer by ninasgramma
Since this is a small business, I assume it is not incorporated.
A sole proprietor cannot pay himself a salary. Partners also do not pay themselves salaries but pass through income to the partners, which is entered on the individual returns.
So the answer is no, you cannot deduct everything and pay no income tax.
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