If you own a new business, it is crucial to know the governing laws concerning business taxes, as well as your obligations as a new business owner to prevent future problems. It is your responsibility to know all the tax laws that may impact your business because it is never safe assuming that your tax obligations start only when you’re making a profit. Keep in mind that hiring employees means having payroll taxes to work on, and if you have a retail business, sales tax comes in.
There are several tax obligations involving the state tax level such as sales tax, unemployment insurance tax, income tax, and property 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. This is considered as a “pay-as-you-go” model that applies to sole proprietors, S corporations, and partners expecting to pay $1,000 in income tax a year, with $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. Sales tax usually applies to retail products and rarely for services, and you need to apply for a sales tax permit and collect applicable state and local sales tax from your customers, if you have a physical shop, warehouse, store, boutique, or office. In order to determine whether your business qualifies to have a physical presence in a specific state, the tax is passed on your state revenue office monthly or quarterly.
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.