4 Things You Need to Know About Small Business Taxes
Are you struggling to file your small business taxes? Do you feel overwhelmed and stressed out by your accounting software?
Small business taxes don't have to be difficult to file, but they are complex. We'll walk you through a few of the most important things about how to file business taxes. (Hint: you may want to find an online accounting professional.)
1. Income Tax
There are more than 30 million small businesses operating in the United States, and all of them have to pay income tax. What you need to know about income tax is that it's the total income of your business minus all tax-deductible expenses. The way you pay the tax, however, depends upon what kind of business you're running.
If your business is a partnership or an LLC that has more than one member, you will have to pay your income tax by filing a business tax return. You figure out your share of the total business and include that income in your personal tax return.
If you're a sole proprietor or the only member of an LLC, you can pay your taxes by filling out a Schedule C and including it with your personal tax return. The same applies if you're an S-corporation owner.
What's important to know is that you can file business taxes online. Accounting professionals can help you figure out the right way to file your taxes -- before the deadline hits.
2. Payroll Tax
Payroll taxes, also known as employment taxes, are taxes that you are required by law to remove from your employees' paychecks. The amount will depend upon the total earnings of your employees. You'll have to pay taxes to FICA for Social Security and Medicare, state and federal unemployment, and workers' compensation taxes. The unemployment tax is actually paid for by your business instead of being collected from your employees.
Currently, the Medicare tax is 2.9% and the Social Security tax is 12.4%. Your employees will pay half of each of those figures and you are responsible for the other half. If your employees earned more than $200,000, they will have to pay an additional Medicare tax in the amount of 0.9%.
It's important to know that you can outsource your accounting and tax work to a qualified, experienced company. They can work with you to make sure that your taxes are paid on time, every time.
3. Sales Tax
If your business is located in a state that collects state income tax, you will need to collect and pay that tax every year. Most states do require businesses to charge sales tax for services: you'll have to check with your state and local government.
Even if you sell online, you may be liable for sales tax. The great thing about establishing a relationship with an accounting firm is that they can help you file business taxes online. You can also include state sales tax collection on your website, making it easy to collect and pay every year.
If your business has a "distributed team" where its employees work remotely, you could be liable for sales taxes in the state where they're located. It's important to talk to an accounting pro to determine what you're liable for in terms of sales taxes.
4. Property Tax
If you own a brick-and-mortar store or an office building, you will be liable for property taxes every year. The taxes will be based on the assessed value of your property, which you can contest if you feel that it's too high.
It's vital to keep track of when your property tax bills are due because they're often due quarterly or monthly. If you have recently bought or sold a property, you'll have to prorate the cost of the property tax bill and share it with the previous owner.
Property tax laws can be confusing, so it's best to check with an accounting company to make sure you're paying a fair amount. We offer free consultations for new customers and can work with businesses of any size.
Additional Small Business Taxes
Depending on the nature of your business, you might have to pay a few more taxes every year. If you're in the transportation industry, you may have to pay an excise tax on the amount of fuel you use every quarter.
You might also be responsible for paying self-employment taxes, depending upon how much profit your business makes. If you're the owner of an LLC, you are going to be held liable for self-employment taxes, contributing to Medicare and Social Security.
Even if you don't have a business license, you are allowed to file taxes as a business. Most states do require you to obtain a business license, but you should be able to file small business taxes even if you don't have the paperwork processed yet.
Keep track of all of your expenses, and keep all of your receipts. You might be able to deduct the cost of some of your operating expenses and advertising. When you meet with an accounting professional, they can help you sort out all of your deductions.
Accounting Firms for Small Business Taxes
We offer comprehensive accounting services for small business taxes. We can help you develop an accountable, efficient system for your inventory and distribution needs. If you're about to go through a funding cycle, we can maintain your pitch deck. We can also help you with your auditing and financial reporting.
The best thing about our firm is that we offer US GAAP-compliant accounting services that you can access at any time, from any location. We work with businesses of any size and can grow as you grow. The cost of hiring an outsourced accounting professional is going to be much less than having a full-time, in-house employee. Why pay for things you don't need?
Send us a quick email and have a look at our FAQs. We will set up a meeting to discover your business's needs. We've delivered more than 8,000 financial reports and are looking forward to assisting your small business get the most out of your tax returns.