If you are a business owner, you know how filing different taxes can be an absolute nightmare. There are tons of paperwork involved and absolutely zero margins for error. There are so many business taxes that need to be filed according to different time periods-
- Annually
- Quarterly
- Monthly
No matter what kind of business you run or operate, there are multiple forms of taxes you need to be aware of. A common business needs to pay taxes on-
- Selling any product or service that is tangible or intangible in nature
- Owning any form of business property like a factory, warehouse, or office
- Using machines, equipment, and other infrastructure to run operations
- Taxes on business owners and their obligations or earnings in the company
- Making a profit for a financial year
In this article, we are going to list down some of the different types of taxes businesses need to pay. If you are a business owner who is unfamiliar with regards to these or has started a new business, you should pay attention to this article.
List of Different Types of Taxes Businesses need to pay
- Sales Tax Nexus Laws-
Sales tax nexus is collected by states on businesses that either has a physical or digital presence in a state. Following the Supreme Court ruling in the Wayfair case, businesses have to pay sales tax if their sales exceed $100,000 or they have more than 200 transactions. For more help understanding how sales tax nexus laws work, visit Taxconnex.
- Income Taxes for Businesses-
Any business that makes a profit from its operations needs to pay income taxes. This is calculated by taking into account the total earnings and expenditures of the business. Depending on what type of business you have, you will be required to pay income taxes on it. As businesses are PTEs (Pass Through Entities) their profits or losses pass to the owners.
- Self-Employment Taxes for Business Owners-
You need to understand that business owners themselves are not drawing any salary. They are shareholders. Their income is calculated according to how the business is doing. This is referred to as a Self-Employment Tax. This is calculated basis the income of a company. If there hasn’t been any income then there is no need to pay this category of taxes.
- Estimated Taxes-
This is a form of tax that business owners need to keep filing for right through the year. If the business is making income, business owners need to be on top of their Estimated Taxes filings and submissions. Estimated taxes need to be paid by business owners on a quarterly basis. This tax for business owners is a combination of business taxes and personal income taxes.
- Business Income Tax for Corporations-
You need to understand that a business corporation is a separate legal and financial entity. If at the end of the financial year, a corporation makes a profit, then the same is distributed in the form of dividends to shareholders. If the profits are not divided, they are kept within the company and are classified as retained earnings. This is filed through IRS Form No- 1120.
- Property and Equipment Taxes-
If your business owns property like a factory or a warehouse or even a commercial office space, it would be required to pay property taxes. This will be assessed based on the valuation of the property and the kind of growth it has had according to every assessment. If a business sells a property, the same is calculated under Capital Gains Taxes.
The Bottom Line
In addition to the above-mentioned types of taxes, businesses also have to pay Payroll Taxes, Excise Taxes, and Employment Taxes. This is why most financial experts suggest that businesses need to take this seriously and take help from experts to ensure that they do not run into any problems. If you have any questions on any tax-related issues for businesses like sales taxes or property taxes, let us know in the comments below.
