Do Small Businesses pay taxes on their gross revenues or their net income?
As a small business owner who claims small business income on your individual tax return (whether through a sole proprietorship, partnership, or S-corp) you pay individual income taxes only on your net income — or profit — and not on your firm’s gross revenue. Accordingly, when Obama says that he would roll back the Bush tax cuts for all couples earning more than $250,000 a year, these income figures include only net income that a small business owner takes home. Because net income is usually far lower than gross revenue, even if your revenue is above $250,000 you are still likely to get a tax cut under Obama’s tax plan. If you are a small business owner using the tax calculator, you should select your income level based on the net income you claim — your revenues minus your costs — to see how you would fare under each candidate.

P.S. There is one additional issue that should be considered though. In the “Joe the Plumber” video, Obama told the plumber and I quote “if your revenue is above two-fifty, then from two-fifty down your tax is going to stay the same. It is true that for say two-fifty up [...Joe tries to interrupt him...] for that additional amount you go from 36-39% which is what it was under Bill Clinton.” Notice he says “revenue” here and not “net income”? You should also verify this is correct and has not been changed. I think more clarification is necessary here. Obama also mentioned a health care credit of 50% to Joe.

Obama also calls “tax cuts” his “tax credits” which are more than the usual tax credit as a deduction from owed tax, it’s really WELFARE checks to people who GET money from his government when they don’t pay any tax at all anyway.

The Truth About Obama’s Small Business Tax Plan

The overwhelming majority of small-business owners would see no increase, and in fact, sole proprietors filing on personal tax returns might even seen a decrease in taxes; and
Obama’s tax plan proposes to raise rates on couples making more than $250,000 or singles earning more than $200,000 per year. Most small business owners do not earn enough to be affected by any tax increases.
According to the Urban-Brookings Tax Policy Center, “several hundred thousand small business owners, at most, would have incomes high enough to be affected by the higher rates on income, capital gains and dividends that Obama proposes.” That is a far cry from 23 million small business owners. (as claimed by palin)

If you don’t make any money in your business in Michigan, that’s not the government’s problem – pony up!