This rate is the average of the tax for business or an individual taxpayer. Small businesses of all types pay an estimated average tax rate of 19.8 percent. Since non-corporate small businesses are taxed through their owner’s personal tax returns, how much they pay in taxes can get mixed up with the tax owed by the individual for all forms of income, not just the income of the business. Under the recent Tax Cuts and Jobs Act, larger businesses charged as corporations will have their taxes reduced from up to 37% to a flat 21%. Sole proprietorship, partnerships and a Limited Liability Company (LLC) do not pay business taxes and pay taxes at the personal tax rate of the owner. Most small businesses are owned by individuals and are not corporations.
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