If you're a new business owner, you're likely beginning to get the picture that there's more to running a successful business than simply delivering a superior product or service. While this is important, business owners have an obligation to keep records and take care of their tax obligations. One of the first things that you'll want to determine is which tax laws apply to your business. If you have employees, you'll be subject to payroll taxes. Retail businesses need to pay sales taxes. There are also quarterly taxes to consider. Here are just a few guidelines to help you understand where your business stands with regards to tax obligations.
What is Your Business Structure?
The way that you have legally structured your business will impact your company's tax obligations. Any business except a sole proprietor will report Federal Taxes differently. Also, most businesses will owe some form of taxes at the state level. Unless you are a sole proprietor, you'll need an Employer Identification Number (EIN), which is like a business' social security number.
Pay Estimated Taxes
Once you have your EIN, you're ready to start paying quarterly taxes on both the state and federal level. This is often overlooked but is required for many businesses that make over a certain, very low, amount each year. If you don't pay these quarterly taxes, your business could be facing some cash flow problems at year's end.
Do You Owe Sales Tax?
If your business only provides services you likely don't have to pay sales tax. However, if you sell products in certain states and have a physical location, you'll be required to pay sales tax to the state on a quarterly basis.
Employment Tax Obligations
One of the biggest tax obligations that you might face is if you have employees on payroll. This will require that you withhold federal and state income taxes, Medicare, and Social Security (FICA), and match your employee's contributions to FICA and Medicare.
Other tax obligations that your business may be subject to include property taxes, franchise taxes, and excise taxes. Contact us with any questions about small business tax obligations or to find out about how our alternative financing solutions can help your business.