In the United States, Corporate/Business tax is imposed at the federal, most states, and some local levels (according to income of entities) treated for tax purposes as corporations. State taxes and rules vary by jurisdiction, many are based on federal concepts and definitions. Conversely, corporations must file tax returns every year as individuals. However, some corporate transactions are not taxable. As, it includes most formations and some type of mergers, acquisitions, and liquidations. Corporate tax is imposed on all domestic and foreign corporations within the jurisdiction.
A tax an business attorney and author of J.K. Lasser’s Tax Deductions for Small Business and the Big Ideas for Small Business newsletter, Barbara Weltman says, “Understand your responsibilities to help you meet them on a timely basis and avoid costly penalties for failing to act on time”. Here is a rundown for a variety of taxes for business.
Income Taxes: There are federal and, state income taxes to contend with, whether the business pays the tax (as in the case of a business organized as a C corporation) or the owner pays the tax on his or her share of business income and expenses. Corporation file an information return. Different states have different corporate income tax according to their own laws. In this, you must have to pay the tax as you earn and receive the income during the year.
Employment Taxes: In a business, you must withhold income taxes and the employees’ share of Social Security and Medicare (FICA) taxes, according to your employees. In case you are a self-employed, you owe self-employment taxes on your net earnings from the business. To pay business taxes, The federal government requires Social Security and Medicare taxes, Federal income tax withholding and Federal Unemployment (FUTA) Tax.
Sales and Use Taxes: If your business sale goods and services, then you need to be required to collect sales taxes on your transactions. Rates may vary by country and Depending on the state, you may have to register to pay and/or collect sales tax. Many states also have a use tax, it is imposed for the storage, use, or purchase of personal property that is not covered by the sales tax.
Property Taxes: Some states collect property tax from businesses in commercial real estate locations. However, some states collect property tax for business assets like computers, equipments and vehicles. The amount of tax to be paid is figured on the total cost of the property or on a certain percentage of the cost.
Excise Taxes: These taxes are depending on what type of business you operate, certain businesses may pay excise taxes on fuels, highway usage by trucks, and for other activities.