Every state in the country has tax laws that apply to everyone, aside from the federal laws that are already in place. Below are some of the common taxes we encounter:
Barring partnership deals (which file information returns), all other kinds of businesses are required by law to annually file an income tax return. Most states have their own laws on tax; they charge corporate taxes based on the [legal structure] of your business venture.
Sole proprietors employ the same form for filling both personal and business taxes. However, a Limited Liability Company separates the business form from the owner’s personal form
While some states employ flat rates, some prefer graduated methods. The federal tax itself however is supposed to be paid as the owner earns income in the course of the year (pay-as-you-go).
Some of the [employment taxes] the federal government demands from companies include the following:
- Federal income tax withholding.
- Federal Unemployment Tax (FUTA) and
- Social Security and Medicare taxes.
While all states are mandated to foot compensation insurance and unemployment insurance tax bills for workers, there are some that specifically instruct companies to also pay disability insurances (temporary). They are New York, New Jersey, Rhode Island, Puerto Rico, California and Hawaii.
Sales And Use Tax
The rates could potentially fluctuate from county to county after a state puts a tax on goods and services. Company owners are expected to pay their taxes on goods and services, as well as vendor taxes. They are also advised to claim consumer taxes from buyers and forward the money to their respective states.
You would be required to go through a registration process in order to pay or access sales tax, but this is subject to your state’s rules.
Exclusions and Exemptions
The most common tax exemptions are on food, and so some states don’t have tax on food. Other noted exemptions are seen medicine, clothes and household utilities. There are even cases where sales taxes are excluded too. Some of the institutions that enjoy this benefit are religious groups and charity organizations.
Use taxes apply in several states and this is usually put on property and acquisitions that are not covered by any form of sales tax. It is common in renting and leasing business and some goods that are imported, such as cars. Note that the rates may actually vary from county to county too. Again, your state will tell if registration is needed to be able to make payment or claim of use taxes.
While some states claim property taxes from companies in major commercial real estate centres, some take property taxes mainly for assets of companies such as cars, machinery and equipment. Remarkably, all the states have their own preferences on taxable properties.
To calculate the total figure that is required to be paid as property tax, the property’s total value is necessary as the amount would be a percentage of the whole.
Business Tax Resources
Get info on federal [Business Taxes] by the Internal Revenue Service.
State and Territory:
To obtain necessary info on your state’s company taxes, go to the [State Government Websites] provided by the IRS. Alternatively, find the [State and Territory Tax Resources] for Small Business Administration.
Close A Business: Tax Checklist
If you are interested in shutting down your business, then ensure you aware of the [procedures to get out of business] which will give you the necessary info about your federal tax requirements, such as the necessary form you would need to first fill.
- A number of steps are required by anyone before a business can be closed:
- You need to [file an annual return] specifically for the year you that you close the business.
- You are required to file last employment tax returns and also [make final federal tax deposits] in case there are any employees.
- Then add to the return a statement that indicates the name of the keeper of the payroll’s records as well as the location’s address.
- Remember, another filing of returns is required if you want to mention the [sale or exchange of business property]
Learn how to close your business. [Watch the IRS video]. Alternatively get in touch with the Business and Specialty Tax Line of the IRS on 1-800-829-4933 (TTY: 1-800-829-4059).
Energy Tax Incentives
Energy-saving appliances and equipment enables you to reduce the cost of your utility bills and as a result, save you some good money. You are also eligible to earn rebates and tax credits as forms of incentives that are made available both at the federal and the state level.
- [Database of State Incentives for Renewables and Efficiency (DSIRE)]
- [Department of Energy (DOE): Tax Credits, Rebates, and Savings]
- [DSIRE: Federal Incentives/Policies for Renewables and Efficiency]
- [Offers and Rebates from Energy Star Partners]
[Estimated tax] is a means of paying of income tax with no withholding involved. Monies from dividends and sole proprietor businesses are examples. Note that you may be required to pay this kind of tax when the income tax taken from your salary or pension is not sufficient. Be cautioned: You face a penalization if you are not able to pay either via estimated tax or by withholding payments.
How to Pay Estimated Tax
You are usually tipped to foot a tax bill of around $1000 or higher (when your return is filed) in case you fall in the category of sole proprietor, a partner or an S-corporation shareholder.
[Form 1040-ES – Estimated Tax for Individuals] helps you gauge and make your estimated tax payments.
You are usually required to pay taxes for your company in the case when you are filing as a corporation and foreseeing a tax debt of about $500 when the return is being filed.
When Do You Pay?
There are 4 divisions in the year designated for payments of tax. Every period has its own [specific payment due date]. To get further information concerning estimated taxes, see [Publication 505, Tax Withholding and Estimated Tax].
Report Suspected Federal Tax Fraud
When any person or group are failing to adhere to the existing tax laws, [report this activity] to the IRS. Remember the [Whistleblower Informant Award] is present for anyone who successfully uncovers any federal tax frauds
However, ensure you [find the correct office] to help give you answers should you have any tax-related inquiries that have nothing to do with fraud.
Taxpayer Identification Numbers (Tin)
[A Taxpayer Identification Number (TIN)] is a unique identification number employed in the administration of tax laws. A TIN is required for statements, returns and generally any tax-related papers you need.
Numerous forms of TINs are present in the current system, including the following:
Social Security Number (SSN) – This number (9-digits) is required by everyone in order to receive any sort of social security or government benefits. It’s even impossible to get a job without your SSN. Learn about getting a [new, replacement, or corrected card].
Employer Identification Number (EIN) – This kind is employed in the identification of a business. It is alternatively known as the federal TIN. You can [apply for an EIN] in several ways. You can now [apply online] as well.
Individual Taxpayer Identification Number (ITIN) – In the case where non-residents or their spouses are unable to obtain social security numbers, this kind is what is available.
You are mandated to fill the IRS Form W-7, [IRS Application for Individual Taxpayer Identification Number] to enable you get your ITIN
Adoption Taxpayer Identification Number (ATIN) – The IRS gives this number on a temporary basis to people who are legally adopting an American citizen but are unable to procure an SSN early enough to file tax returns. It is also a nine-digit number.
You need to fill [Form W-7A, Application for Taxpayer Identification Number for Pending U.S. Adoptions] for an ATIN application.
Preparer Tax Identification Number (PTIN) –
You are required use a PTIN on your tax return preparation in case you are a paid tax preparer yourself. Get your PTIN via the [IRS sign-up system].
The SSN is given by the Social Security Administration (SSA) whereas all the other TINs are given by the Internal Revenue Service (IRS).