When you are lucky enough to own and run a small business, one thing that you need to make sure you’re doing is paying the right amount of taxes. This can take quite a lot of planning and learning. It is always wise to have an accountant that is helping you keep it all straight. If you are new to owning a business, you might not know the ins and outs yet. Propel Your Accounting is here to talk about the different taxes that small businesses are responsible for paying that differ from filing as an individual.
What Taxes Small Business Owners Need to Pay
Knowing all the taxes you’re responsible for as a small business owner is vital.
– Income Tax: The income taxes you will be paying as a business owner will vary depending on the way that your business is legally structured. Some businesses have partnerships, some have LLC members, and some will be paying income taxes together with their individual tax returns.
– Self-Employment Tax: Anyone who is employed has to pay social security and Medicare taxes. If you work for someone else, they pay for half of these taxes for you. As a business owner who is self employed, you will have to cover the entire cost.
– Estimated Tax: For business owners, sometimes you pay income taxes as you go throughout the year. If you don’t, you will be responsible for paying an estimated tax. If you underestimate this and pay less, you might be penalized for it. Make sure you’re paying enough if you are required to pay estimated taxes.
– Employment Tax: If your business has employees, you will need to pay employment taxes that include FICA, income taxes withheld from employees, and federal unemployment tax.
– Excise Tax: There is an umbrella term for environmental taxes, transportation taxes, and communication taxes known as excise tax. Not every business is responsible for paying these so check with your accountant.
– State Taxes: The local government, or state government, will have their own demands as far as taxes are concerned. For those that are doing business in more than one state, you need to make sure that you paying the right state taxes and may have to pay multiple state taxes.
– Franchise Tax: Sometimes, the state that you are doing business in will require you to pay a franchise tax for the privilege of doing business in their state. These taxes vary greatly from state to state.
– Real Estate Tax: If you own property where you do your business, you will be required to pay real estate taxes on that property.
Bookkeeping, Accounting, Business Consulting & HR / Admin Services in the United States of America
If you have any questions about the taxes that you owe as a business owner, you can turn to Propel Your Accounting to answer them. We will help you prepare your taxes to ensure you are overpaying or underpaying. Call us today!
