Tag Archive for – law & taxes

Tax Factors In The Choice Of Legal Form

Accountant Gerhard informed home the tax factors in the choice of legal form one of the most important decisions the entrepreneurial start-ups is the selection of the correct legal form. Home the Munich tax office specialists inform tax aspects of the choice of legal form. Under German law, the entrepreneur can choose the company forms of the partnership (OHG or GbR, etc.) or Corporation (GmbH, AG, etc.) for his company. Due to their different tax assessment, this decision has far-reaching consequences for the entrepreneur. Compulsory bookkeeping & financial statements companies are obliged only to simple accounting and the financial statements by means of revenue surplus account. Corporations, however, are subject to the obligation to the duplicate accounting records and the financial statements without exception after annual balance sheet. The entrepreneur has no experience in book-keeping and accounting, it produces Obligation to keep records a capital company compared to the partnership significantly higher costs.

Tax / income tax corporations are legal entities. As such, they are obliged to pay the tax. The taxation of their annual earnings is made with a flat tax of 15 percent plus another 5.5 percent solidarity surcharge. The tax on profits is a partnership via the progressive running rate of income tax. He can, is assuming appropriate revenues, significantly above the rate of corporation tax, is however reduced by tax-free basic allowance.

Dividends to shareholders of a corporation, that income tax payer, are subject to in addition to a further tax on corporate income tax for the flat tax and the partial income procedure. Loss allocation the allocation of gains and losses made partnerships directly reduces the income tax burden of the entrepreneur. The shareholders of Corporations benefit tax for their content, nor the profit distribution from a such losses. Loss of business be here recorded as loss carried forward in the balance sheet and later charged with winning. Fundamental differences between persons and corporations are trade tax on the tax. Partnerships are required to pay the trade tax, with the exception of commercial tax exempt freelancers. You have a qualifying exemption of 24,500 euros and the ability to charge the paid tax with income tax. Corporations are also required to pay the trade tax. Unlike partnerships no allowances are granted by the legislator them and there will be no withholding of tax with the tax. Payroll tax private companies can charge the entrepreneur pay and pension tax not as operating expense with income tax. In contrast, corresponding expenditure for the Managing Director of a public company as operating expenses are tax deductible, because here it is costs incurred by the company due to contractual employment conditions as for ordinary workers. The choice of the best legal form for his company is extremely important for the economic success of existence’s founder. The thorough advice from an expert is recommended due to the high complexity of legal and tax consequences of any legal form.