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 important to know what tax law affects 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.
You’ll encounter several tax obligation at the state level including property tax, sales tax, unemployment insurance tax, and income tax. When it comes to getting a Federal Tax ID, an Employer Identification Number or EIN is considered the business equivalent of your social security number which is required by businesses with employees, operating as a partnership or corporation, and other obligations. Estimating state and federal taxes are easily overlooked by new business owners, with income tax payments taken care of by withholding. Self-employed business owners need to estimate their state and federal income tax payment, 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. It helps to check the IRS estimated tax guide to help you in calculating your estimated tax. 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. There are also tax ramifications hiring an independent contractor or freelance worker. You can always check our homepage or website to get more information about business accounting and business taxes. As a business owner, it is important to know your responsibilities and ensure that you are paying your taxes on time, you are paying your employees’ taxes right, and you are abiding the law. Our expert accounting experts can help you with your business taxes and accounting needs, so contact us today.