If you own or manage a small business, it’s important to meet your tax deadlines to avoid costly fees and penalties. Which taxes you are required to pay depends on your business structure and other factors. Here are five types of business taxes to be aware of:
1. Income Tax
If your business is not a partnership, income taxes (federal and state) need to be filed by April 15. In a partnership, profits and losses are passed through to the partners who report them on their personal tax returns. A partnership must file an annual information report.
2. Estimated Tax
Sole proprietors, partners, or shareholders in S corporations are expected to submit estimated tax payments if they will owe $1,000 or more in annual federal income taxes. The corresponding figure for corporations is $500 or more. Estimated taxes are usually paid quarterly but can be made on a weekly, biweekly, or monthly basis.
3. Employment Taxes
If your business has employees, you are required to do the following:
- Withhold federal and state income taxes from employees’ wages and deposit them.
- Pay Federal Unemployment Tax (FUTA).
- Withhold taxes for Social Security and Medicare and also make your own contributions.
Click here to get details about which employment taxes are due when.
If you use independent contractors, you need to file a Form 1099 for each contractor who received $600 or more during the tax year.
4. Self-Employment Tax
If you are self-employed, you must pay self-employment taxes to cover Social Security and Medicare benefits for yourself. If you anticipate owing $1,000 or more in federal income tax, you should make estimated payments.
5. Excise Tax
You may have to pay excise taxes if you make or sell certain products or are paid for certain services. Learn more about excise taxes here.
You may have to file information returns to cover items such as payments to independent contractors, rent, and IRA distributions.
How to Stay on Schedule
The IRS provides an online Tax Calendar to help you determine your important tax due dates. Orcutt & Co. recognizes the headache you may get by trying to work out how to meet your tax deadlines and avoid unnecessary fees and penalties. So, never miss a tax deadline again by connecting with Orcutt & Co. Contact us for more information.