Thanks for watching, Garrett! Retained earnings themselves are not directly taxed. However, the way they are treated can have tax implications depending on the business structure. Here’s an overview: Sole Proprietorships and Partnerships: Retained earnings are not taxed separately. Instead, the profits of the business are taxed as personal income to the owners, regardless of whether the profits are retained in the business or distributed. Corporations (C Corporations): Corporations are subject to corporate income tax on their profits. If the corporation retains earnings (instead of distributing them as dividends), those earnings have already been taxed at the corporate level. If the retained earnings are later distributed as dividends to shareholders, the dividends are taxed again at the individual level, resulting in double taxation. S Corporations: S Corporations are pass-through entities, meaning the profits (including retained earnings) pass through to the shareholders and are taxed as personal income. The business itself is not taxed at the corporate level. The specific tax treatment can vary based on the jurisdiction and other factors, so it’s always a good idea for small business owners to consult with a tax professional or accountant to understand their specific tax obligations.