He was a payroll accountant at a municipality. Honestly, I did not really understand the day-to-day of
what he did, but I could clearly see he enjoyed doing it. He did not hate it, while every other adult in
my life hated their jobs. He was happy, joking with co-workers, and getting tons of overtime. This
stuck with me. Years later, on the eve of my 30th birthday, I needed to make a career change. I had
been working in the hospitality industry for years and had lost all interest in cooking professionally. I
have now been an accountant longer than I was a cook and like my uncle before me I love being an
accountant.
By earning my master’s degree, I hope to develop the skills needed to move up into a management
position with my current employer. I work at the largest affordable housing organization in Southern
Maine. The finance team supports the other departments that build and manage safe, clean,
affordable housing for the unhoused, low-income, new-Mainers and seniors. When I am not at
work, my wife and I spend time with our cats often watching horror movies.
When deciding what form your new business should take, you must consider the advantages and
disadvantages of each form. A sole proprietorship is an unincorporated business owned by one
person (Anderson, et al., 2023). A sole proprietorship is not a separate entity from the owner.
Income and expenses are presented on the owner's individual tax return. There are no tax
consequences for contributing cash to or withdrawing profits from the business. Sole
proprietorships are responsible for the full Social Security taxes, unlike corporate employees
(Anderson, et al., 2023).
A partnership is an unincorporated business run by two or more entities for profit (Anderson, et al.,
2023). c The partnership does not pay taxes, the income passes to the returns of the partners.
Partnership income is not double taxed. With few exceptions income contributes to the partnership
or profits withdrawn are generally not taxed (Anderson, et al., 2023). The partners must pay taxes
on profits even if there are no distributions. Partners must pay the full self-employment taxes
(Fleischman & Bryant, 2000).
A C-Corporation is a separate and distinct entity from its owners (Anderson, et al., 2023). C corps are
taxed at the corporate level and when earnings are distributed to shareholders (Fleischman &
Bryant, 2000). Shareholder employees only contribute half of the Social Security taxes. A C-Corp can
also use a fiscal year-end instead of a calendar year-end (Fleischman & Bryant, 2000). Unfortunately,
net operating losses convene no tax benefit to the shareholders in the year of the loss. The same is
true for capital losses (Anderson, et al., 2023). An S-corporation is a passthrough entity with
characteristics of both a partnership and the protections of a corporation.
Sole proprietorship example: Betsy Cashew had recently been let go from a large tech firm due to a
contraction in that industry. Within days of this news, Betsy received a gift from a relative that had
passed, $30,000. With these funds Ms. Cashew decides to purchase a used van, a shop vac, a bundle
of microfiber clothes and a king’s ransom in cleaning against and polishes; Betsy was opening her
own mobile car detailing service. She never wanted to have a boss that could fire her again, she
wanted control. Betsy is the sole owner and employee. There is no plan to expand the business or
hire additional help. Betsy Cashew has decided to establish her business in the form of a sole
proprietorship.
Anderson, Kenneth, et al., editors. Pearson’s Federal Taxation 2023 Corporations, Partnerships,
Estates & Trusts. Pearson Education, Inc, 2023.
Fleischman, Gary M, and Jeffery J Bryant. “C Corporation, LLC, or Sole Proprietorship? What Form Is
Best for Your Business?” Management Accounting Quarterly, vol. 1, no. 3, 2000, pp. 1–8.
