Shaquel is considering starting his own business but has been an employee for all of his working life. He is interviewing a professional financial consultant to better understand how this shift to entrepreneurship might affect his taxes. What will the financial consultant MOST likely say?

Question

Entrepreneurs typically have a “company” that will set taxes aside and pay them, but employees have to save and pay taxes themselves.

As an employee he paid 10 percent in taxes but business owners only pay 5 percent, so he would be paying less in taxes as a business owner.

Employees file their taxes twice a year, whereas business owners file once a year, so this would be an adjustment.

As a business owner he will have some tax advantages in terms of items he can “write off” on his taxes to save money.

Answer 1

The financial consultant will MOST likely say:

"As a business owner he will have some tax advantages in terms of items he can 'write off' on his taxes to save money."

This is accurate because business owners often have the ability to deduct various business-related expenses from their taxable income, which can result in significant tax savings. These deductions might include costs for supplies, equipment, travel, and other operational expenses that employees cannot deduct.