Did you know that there are in the United States? If you are a new business owner you might be a bit confused or even overwhelmed about tax laws. The good news is you don’t have to be!
We have put together this short guide to share everything you must know about business taxes and the laws. Keep reading to learn more.
One of the first things you should know is that the business structure that you choose will determine the taxes that you are going to pay in the future and this business structure also affects how you will pay your taxes.
The most common business structures you can choose from include: sole proprietorship, partnership, corporation, s-corporation, and an LLC or Limited Liability Company. If you have not chosen your business structure yet, we highly recommend seeking legal guidance to ensure that you choose the best structure for your needs.
Employer Identification Number
If you do not have an employer identification number (EIN) yet then this might be your next step. You should get an EIN right after registering a new business. This number is your federal tax ID which can be compared to the social security number for a business.
You will use your EIN when filing taxes and whenever you apply for credit.
If you plan on having employees then you will have to follow the federal tax requirements for the forms you will need to use and also what you will have to pay. The employment taxes include federal income tax withholding, social security taxes, Medicare taxes, and federal unemployment taxes (FUTA).
The federal unemployment taxes are a requirement because this will ensure that people can receive unemployment benefits in the event that they lose their job. Every state also requires businesses to pay unemployment insurance taxes and worker’s compensation insurance.
Sales and Use Tax
Depending on the state that your business is located in, there might be taxes on the sale of goods and services. Make sure to double-check your state to see if you have to register to pay state taxes or register to collect sales taxes. Some states will exclude sales tax on things like medicine, clothing, utilities, food, and newspapers.
Federal taxes have to be paid on income that is not subject to withholding. You will also have to pay federal tax if the amount of the federal income tax being withheld is not enough to cover all of the taxes that you owe.
Feeling More Confident About Tax Laws?
We hope that now that you learned the ins and outs of tax laws, you are feeling more confident moving forward with your small business. Please keep in mind that it is always a great idea to find a reliable accountant to help you with your business taxes.
If this blog post helped you out today, feel free to keep browsing our business section for some more tips and tricks.