Can anyone help to clarify the category for the income tax paid for Sole Proprietor and LLC business in US
Is it categorized as corporate tax in Profit and Loss ?
Hey @faridah! You can create your own accounts or customize categories from your Chart of Accounts page. You can always edit an account name down the track if you want to update it! You can use a name that is advised by your accountant, or that you think best suits your business
In the US neither one of those entities actually pays tax. Therefore, income tax expense is not an allowable deduction. So any income taxes that are generated by the business and paid for out of business funds becomes an owners draw. Hope that helps.
@EmmaP thank you for the reply
@Mikeg great ,I am clear about the taxes paid is owners drawings
We in malaysia apply the same as well .
Thank you very much