If you have just started a business or are in the process of starting one, it is important beforehand that you understand what your tax obligations will be. It can seem like a complicated and overwhelming task, however, Gov Doc Filing can help you through all the processes of obtaining an EIN number (when you apply for ein online) to submitting your LLC forms. When it comes to understanding how business taxes work, there are a few tips that can help you gain the basics right away!
- Business Structure: The way in which your business is legally structured will decide on how your taxes are affected. For example, sole proprietorship business owners are required to estimate their state and federal income tax payment and send a payment to the IRS. This same model applies to partnerships and S-Corporations. An LLC (limited liability corporation) gets taxed as a corporation, separate from the business owner(s).
- Federal Tax ID: Many businesses will need to obtain an employer identification number (EIN). This number is used to qualify your business as a legal entity. You will need one if you have employees, are a corporation, or for other reasons. You can find out more through Gov Doc Filing on what the requirements are to need one.
- Sales Taxes: Sales taxes are applied to mainly retail products, and rarely to services. If your business has a physical office or store, you will need to apply and obtain a sales tax permit. This means you will have to collect state and local sales tax from all of your customers.
- Employment Taxes: If you have employees, you will need to withhold their social security and state and federal income taxes from their wages/salaries. You will also need to withhold Medicare.
- Property Taxes: The local government will collect property taxes for certain assets in your business like vehicles or computers. Also, your business may be subjected to having the state collect property tax if it is in a commercial location.