Taxes 101: Small Business Edition

Posted by admin on 2021

There is one thing big and small businesses owners will always have in common, they both have to pay taxes. As a small business owner, you have to keep track of all your spending; therefore, taxes must become part of your payments. Even though your business doesn't seem big enough to require a tax fee, it does; in fact, small businesses like yours are constantly targeted for tax audits.

There are state taxes, federal taxes, city taxes, and many more to keep track of. Also, the type of taxes you'll pay depends on the industry of your business, the number of employees you have, the type of property you own, and the type of business you're in.

Sounds like a lot of work, doesn't it? A certified accountant that offers tax services in L.A. is your best source of information for this type of situation, but let us give you an overview of the type of taxes you have to pay to get you started.

Income Tax

All businesses must file and pay for taxes on any income they receive during the year. Each state imposes its tax laws, but still, the majority require an income tax return from every business. Our team at Roberts Accounting will help you find out your business tax requirements according to your location.

Self-Employment Tax

Being your own boss means paying Social Security and Medicare taxes to be covered by the Social Security system. The self-employment tax rate is 15.3%. You can deduct the employer-equivalent portion from your self-employment tax while figuring your adjusted gross income.

Experts in tax services in L.A., such as Roberts Accounting, can give you a hand to find out exactly how much you'd be paying and how you should pay it.

Employment Taxes

If you have any employees, this type of tax is very important. It can be divided into three parts:

  • Social Security and Medicare taxes
  • Federal income tax withholding
  • Federal Unemployment Tax: This one is specifically to ensure that people receive unemployment benefits after losing their jobs.

All the states demand businesses to pay these insurance taxes for all their team members.

Excise Tax

If you manufacture or sell certain products that require various types of equipment, special facilities, or the use of other products, you must pay an excise tax. This specific tax includes:

  • Environmental taxes
  • Transportation and communication taxes
  • Fuel taxes
  • Manufacturer taxes on the sale or use of different articles

If you're not sure if your business qualifies for this tax, our experts at Roberts Accounting can advise you on that and give you all the information you need to make no mistakes.

Property Taxes

Every state has different requirements for this type of tax. Some collect it from businesses in commercial real estate locations, others from any company's vehicles, equipment, or assets. It is calculated by the total value of the property or a certain percentage of the value.

Sales and Use Tax

Usually, food, clothing, medicine, newspapers, and utilities are excluded from sales tax; however, this may vary according to the state your business is in. This tax can also apply to goods and services purchased outside the state where you conduct your business.

Estimated Taxes

This is the tax you pay in case what is being withheld from your income tax doesn't cover the total of taxes you owe. Usually, this specific tax is paid 4 times a year; if not, your business might be charged with a penalty.

We Tax While You Relax

According to The National Taxpayer Advocate, small businesses sum up around 2.5 billion hours each year preparing tax returns and responding to IRS inquiries. This study also showed that 70% of small businesses hire professional tax services for their audits and to represent their interests before the IRS.

You must be wondering, "are there any accounting services near me?" Of course! No more wasting time, money, and resources. Roberts Accounting is here to focus on your potential tax burden while forming your business.

We know that taxes can be confusing and overwhelming, but you're not alone on this. We help you develop tax-saving strategies and also make the best decisions for your business.

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