If you are just new to business, it is very important to equip yourself with the right knowledge and understanding about business taxes, and your corresponding obligations as a business owner. It is never safe to assume that your tax obligations will only start once you make profits because each business is unique, so it is your responsibility to know the different tax laws affecting your business. Remember that if you have employees, you have payroll tax obligations, and if you are operating a retail business, there is also sales tax you need to work on.
When it comes to the state level, the different tax obligations you will likely encounter include sales tax, property tax, income tax, and unemployment insurance tax. While sole proprietors don’t need a Federal Tax ID (Employer Identification Number), those businesses with employees, operating as a corporation or partnership, and other obligations need to have it. Many starting businesses overlook estimating their state and federal taxes, and previously had all your income tax covered by withholding. Every quarter, it is very important to make an estimate of state and federal income tax payment for self-employed business owners, then send a check to the state treasury and the IRS. It is regarded as a “pay-as-you-go” model appropriate and applying to sole proprietors, S corporations, and partners expecting to pay $1,000 in income tax a year, decreasing to $500 threshold for corporations. In order to help you in calculating your estimate tax, you can check the IRS estimated tax guide to help you out. You should apply for a sales tax permit if you have a physical shop, warehouse, store, boutique, or office because sales tax applies to retail products, and collect applicable state and local sales tax from your customers. Every month or every quarter, the tax is passed on your state revenue office and it is used for determining if your business is qualified to have a physical presence in a particular state.
It is required to withhold Social Security (FICA), Medicare, federal taxes, and state taxes from the salaries of your employees if you already have started your businesses with your own employees. Keep in mind that there are also associated tax ramifications involving hiring independent contractors or freelance workers. If you need more details about business accounting and business taxes, feel free to check our website or homepage now. When it comes to business tax, it is very important to know your obligations, not just the sales tax but also the employee taxes, property taxes, and other governing laws. Our expert accounting experts can help you with your business taxes and accounting needs, so contact us today.