Have you moved on from working for a company to being in charge of your own? Do you want to avoid as many financial and legal issues as possible as a small business owner? If so, then you should know the answer to the question to “What taxes do businesses pay?” These taxes will depend on the location of your company, how many people you hire, and how much your company makes. With our knowledge of finances, you will be able to avoid penalties and stay on track with your business objectives. Here are all the taxes that your small business needs to pay.
1. Income Tax
One of the business taxes that your company is obligated to pay is an income tax, which is based on the profit of your business. Small businesses usually take the form of sole proprietors and single-member LLCs, and they use a process called a pass-through tax to pay through personal income tax returns. With a service such as ThePayStubs, you can figure out what you can include on this tax how much you must and don’t have to pay. Limited companies have the option of paying on any salaries or dividends taken from the company.
2. Property Tax
Another business tax that you need to be aware of is a property tax, which applies to companies that own a building or other form of real property. You must pay this tax to the city or county where this business is located. The amount of taxes that you will have to pay in this situation may be based on the value of the property, so you may have to fork over more money for a newer facility. If you sell a piece of your company’s property, then you may have access to certain considerations.
3. National Insurance
Paying business taxes requires your attention to payments that are not technically not called taxes. Among them is national insurance (NI), which is money that you need to pay to the government to keep your company running. How much you pay in NI will depend on how much your business makes, with options ranging from Class 2 NI to Class 4 NI. This will affect your eligibility for state pension and other benefits.
4. Sales Tax
Taxes on business also depend on the kind of products and services you offer, as well as how many. That’s where a sales tax comes in, and it applies to business operates in a state that has a state income tax. The money used in this tax comes from customers, and you must report on when you receive this money and pay it each week or month, depending on state laws. Some states also require sales taxes for each item that you sell online.
5. Payroll Tax
Another tax that you must collect and report on a regular basis is the payroll tax, which you must obtain from employees, thus earning it the name employment tax. You will need to pay these taxes to the Social Security Administration and the IRS. These local business taxes are based on what’s available to employees, such as social security, medicare, and federal or state unemployment. The more your employees make, the higher the taxes will be.
Our Take
Now that you have the answer to “what taxes do business pay?” you can keep your company financially and legally protected. Check out more of our articles on accounting and finance so you can keep your business bank account in good shape.