What is the normal tax rate for small businesses?
The size, legal structure and profitability of your business will determine your tax rate. However, on average, the lowest effective rate is paid by sole proprietorships at only 15.1% in 2013 as per the Office of Advocacy at the SBA. S-corporations on the other hand pay (31.6%).
The “effective tax rate” refers to the tax rate of the net profit of your business expressed as a percentage – the average rate you have to pay on all the money your business brings in over a year – compared to the marginal tax rate, which are the taxes paid on the most recent income.
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