A tax assessed to small business owners reporting their income via Schedule C or via a K-1 from a partnership or limited liability company. It has two underlying components, the social security tax and the medicare tax. The combined rate equals 15.3% except during 2010 and 2011 whereby Congress reduced the tax to 13.3%.
When an owner of a small business operation transfers money from the business bank account to their personal bank account the transaction is commonly referred to as a ‘Draw’. There are other terms but this […]