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.
There are several tax obligations involving the state tax level such as sales tax, unemployment insurance tax, income tax, and property tax. The business equivalent of your social security number is the Employer Identification Number (EIN), which is required by businesses operating as a corporation or partnership, those with employees, and other obligations. Estimating taxes part is usually overlooked most especially if you are just a beginner when it comes to business, 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. It helps to check the IRS estimated tax guide to help you in calculating your estimated tax. Sales tax applies to retail products, and you need to apply for a sales tax permit if you have a physical store, shop, warehouse, or office, and collect applicable state and local sales tax from your customers. The tax is passed to your state revenue office either on a monthly or quarterly basis, to determine whether your business qualifies to have a physical presence in a specific state.
If you already have started a business and you have employees on payroll, it is important to withhold the Social Security (FICA), Medicare, federal taxes, and state taxes from your staff’s salaries. Keep in mind that there are also associated tax ramifications involving hiring independent contractors or freelance workers. You can always check our homepage or website to get more information about business accounting and business taxes. It is important for a business owner to know the business tax laws affecting not just the business but also the employees. Allow us to help you out and make your life easier.