5 Types of Business Taxes for a new business

Starting a new business is an exciting time, but it can also be a little daunting. There are so many things to think about, from the products and services you're going to offer to the legal structure of your business. One thing you definitely don't want to forget is the tax requirements! In this blog post, we'll outline the basics of what you need to know in order to stay compliant with tax laws. We'll also discuss some of the different business entities you can choose from, and how they impact your tax liability. Let's get started!

1) Income Tax

The first thing you need to do is choose the right business entity. This decision will have implications for how much tax you'll owe, so it's important to weigh your options carefully. The most common business entities are sole proprietorships, partnerships, LLCs, and corporations. Each has its own advantages and disadvantages, so be sure to consult with a qualified tax professional before making your final decision.

Once you've chosen your business entity, it's time to start thinking about taxes! Businesses are required to pay federal income taxes, as well as payroll taxes and state sales taxes (if applicable). The amount of tax you'll owe will depend on a number of factors, including the type of business you're running and the state in which you're located. Be sure to consult with a tax advisor to get an estimate of what your tax liability will be.

There are a few different ways to file your business taxes, depending on the type of business you have. When you are self-employed or have a sole proprietorship, the income tax is filed on Schedule C which is attached to the common IRS Form 1040, but there are other forms that may be required for certain types of businesses. LLCs, for example, typically file using IRS Form 1065. Again, it's important to consult with a tax professional to ensure that you're filing the correct forms.

Paying taxes may not be the most exciting part of starting a business, but it's definitely one of the most important! By staying compliant with the tax laws, you'll avoid any potential penalties and keep your business running smoothly.

2) State Business Tax

If you have established a business entity, such as an LLC, S Corp or C Corp, the State's Secretary of State will impose their annual Corporate tax, which is normally filed with your income tax return. The tax rates will vary depending on your business entity, and the income generated by your business. To ensure compliance, timely payment & filing is required to ensure that your business entity remains in good standing with the State.

3) Payroll & Employment Tax

Other Business Taxes would include payroll & employee taxes if you have employees. Then, your business would be responsible for half of the Social Security and Medicare taxes owed by the employee. You would also withhold income taxes from your employee's paychecks and remit those funds to the IRS. In addition, you would need to pay unemployment taxes if your business is located in a state that collects them. Although it may sound a bit complicated, your business can easily run payroll by the use of a payroll service provider who will easily handle the payroll taxes & filings.

4) Sales Tax

If you sell products or services, you may also be required to collect and remit state sales tax. This is usually done through a point-of-sale system at the time of purchase. The amount of sales tax you owe will depend on the state in which your business is located, as well as the type of product or service you're selling.

5) Local Tax

Some Cities or local towns will impose their own tax, such as to maintain a business license. The Tax is separately filed & paid from your regular income tax. The best way to verify this is with your local business license for compliance when the fee is due, and if there are any forms to be filed with the amount due.

There are a lot of things to think about when starting a business, but don't let taxes be one of them! By following these simple tips, you can ensure that you're compliant with the tax laws and avoid any penalties. If you have any questions, be sure to consult with the tax professionals here at Orange Coast tax.