Tax Basics for Startups

Per Diem Rates from the U.S. General Services Administration

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Rates are set by fiscal year, effective October 1 each year. Find current rates in the continental United States ("CONUS Rates").

What is Income?



Webster's dictionary has a simple definition of income:

A gain, usually measured in money that derives from labor, business, or property.

The Internal Revenue Code also has a definition of income, but it's not as simple.

IRC Section 61(a) it defines Gross Income (GI) this way:

Except as otherwise provided in this subtitle, gross income means all income from whatever source derived, including (but not limited to) the following items:

  • Gross income from business
  • Gains from dealings in property
  • Interest
  • Rents
  • Royalties
  • Dividends
  • Alimony and separate maintenance payments
  • Annuities
  • Income from life insurance and endowment contracts
  • Pensions
  • Income from discharge of indebtedness
  • Distributive share of partnership gross income
  • Income in respect of a decedent
  • Income from an interest in an estate or trust

It doesn't stop there.

There are Items Specifically Included in Gross Income listed in subchapter B, Part II, Sections 71 through 90 of the Code.

Even income received illegally is taxable-remember Al Capone?

From a tax standpoint, not all income is created equally.

For example, certain types of income are exempt from federal income tax, such as interest on municipal bonds.

Other types of income may be partially taxable depending on the taxpayer's total income.

For example, social security income may be partially taxable, depending on the amount of the taxpayer's overall income

Then there is the dividend received deduction for corporations.

If a corporation owns the stock of another domestic corporation and such corporation pays a dividend, the corporation receiving the dividend my exclude 70% or 80% of the amount of dividend from income, depending on the percentage of stock its owns.

Avoid costly penalties!

Use the IRS Online Tax Calendar
to check filing and deposit deadlines.