Do you need help keeping up with all the different tax requirements?
Knowing the different types of taxes you owe can help you plan. The more you know about your tax obligations, the more time you’ll have to fulfill them each year.
Paying taxes helps your business avoid tax penalties, such as fines or even criminal charges in extreme cases.
Here are the different types of taxes that every small business should know of. Keep reading!
Personal Property Taxes
Personal property taxes are taxes on tangible items such as vehicles, office furniture, and equipment. This tax is the value of the physical items owned, and the local jurisdiction sets the rate.
Personal property tax payment is usually due but could carry different deadlines depending on each jurisdiction. Business owners must consider personal property and other taxes to keep their businesses running.
Small businesses should seek advice from a bookkeeping service to ensure they follow all the applicable taxes and regulations in their area.
Small businesses owe various taxes, the most common being income tax. An income tax is a tax imposed by the government on companies’ net income.
It is generally calculated using the same income tax rates as individuals. Still, some businesses may be liable to pay a higher rate depending on their legal structure and income level.
The income tax rate will vary between states and countries, with some offering tax deductions or credits for certain activities or expenses.
Self-employment tax is the Social Security and Medicare taxes that individuals must pay if they are self-employed. This tax is also known as the SE tax. Small business owners or self-employed individuals are responsible for filing taxes if they make $400 or more in net income.
This SE tax funded the Social Security and Medicare programs. The SE tax works the same way as employer-employment taxes: The individuals must pay the same rate, but both halves are the responsibility of the self-employed individual.
Payroll taxes are a type of small tax businesses must pay to use people. This includes withholdings from employees’ wages as well as employer contributions.
The most common payroll taxes are Federal Insurance Contributions Act (FICA) taxes, which employers and employees share. Employers may need to pay state payroll taxes, such as contributions to disability insurance, and there may also be local taxes.
Failure to file and pay payroll taxes on time may result in heavy penalties.
Sales taxes are taxes on transactions made by the consumer when purchasing goods or services. These are governments’ duties, and they will use them to fund projects and programs that benefit their citizens.
Depending on the state, businesses may need to collect sales taxes on all taxable sales and services. Companies must report their collections to the state government and may be subject to audits.
When the auditors find discrepancies, businesses are liable for unpaid sales taxes plus interest and possible penalties. Complying with the laws on sales taxes is essential to running a successful small business.
Guide to Different Types of Taxes
It needs to research all the applicable taxes to ensure compliance and accuracy. Seeking professional help when setting up your business taxes is a wise move.
Contact a knowledgeable accountant to discuss the different types of taxes that may apply to your small business.
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