Business Tax Responsibilites
The tax responsibilities of business owners are numerous and complex. Although all businesses have federal, state and local tax responsibilities, the exact nature of these obligations varies according to such criteria as the structure of the business, the location of the business, the number of employees and the nature of the business. Business tax obligations include withholding, paying and reporting taxes according to various timetables and guidelines set up by the various tax agencies.
Business tax obligations generally fall into the following four categories:
- Income taxes
Income taxes must be paid at both the federal and state levels by all business entities except partnerships. These taxes are normally paid as income is earned but are sometimes paid through quarterly estimated tax payments.
- Employment taxes
Employment taxes must be paid by all business entities that have employees. These taxes include Federal Income Taxes that are withheld from employee wages together with Social Security and Medicare (FICA) Taxes that are withheld from wages and paid along with a matching amount from the employer. Businesses are also responsible for paying Federal Unemployment (FUTA) Taxes in an amount that is calculated from the total of the wages and salaries paid out to employees of the business.
- Excise Taxes
Excise taxes are taxes paid by businesses for the production and sale of certain products or services. Unlike the sales tax, the excise tax is a fixed amount per item rather than a percentage of the sale price. Excise taxes must be filed quarterly using IRS Form 720 which contains a complete list of the items and services that are subject to this form of taxation.
- Self-employment taxes
Self-employment taxes include income, Social Security and Medicare Taxes paid by individuals who work for themselves. These taxes are calculated using Form 1040 and Schedule SE and are normally paid through quarterly estimated tax payments.
Business tax responsibilities are so complex and time consuming that they have the potential to divert valuable time and resources away from the operation and resulting profitability of the business. In addition, business tax payment and reporting procedures can be so difficult to analyze and understand that many business owners do not know how to effectively use the provisions of the tax code to their maximum advantage.
If you are a business owner seeking business tax services or business accounting solutions, the licensed professionals at BusinessTaxPreparation.com can provide you with the expertise you are looking for. Call us today at (866) 676-9417 or fill out our online request form to receive a free, no obligation consultation.