Answer to Question #273598 in Accounting for Another you

Question

1. What classification of taxpayer are sole proprietorship form of business organization?
2. What items are considered to be deductions of gross sales that are subject to 8 percent income tax rate?
3. How much is the ceiling amount fixed by law to determine VAT registrable taxpayers?
4. How do you call a taxpayer who receives income from employment and business or practice of profession?

Answer 1

Solution:

1.). A sole proprietorship is not considered a taxable entity. All of the assets and liabilities of the business are treated as belonging solely to you, the business owner. Similarly, all business income and expenses are considered to be your income and expenses.

You must report all business income and losses on your personal income tax return as a sole proprietor; the business is not taxed separately.

 

2.). Business expenses are items considered to be deductions of gross sales that are subject to an 8 percent income tax rate.

Allowable deductions from gross income are for business expenses, which are those that are ordinary and necessary for the conduct of a trade, business, or profession.

 

3.). The VAT threshold is currently set at three million pesos (P3,000,000.00), and it will be used to calculate the income tax liability of self-employed individuals and/or professionals under Tax Code Sections 24(A)(2)(b) and 24(A)(2)(C)(2).

 

4.). A taxpayer who receives income from employment and business or practice of a profession is known as a mixed-income earner.

Mixed-income earners are those who derive income from business or practice of profession and compensation income.