You should know that you have requirements to fulfill when you have your own business and one of those requirements is paying for business taxes. The payment of taxes is required by the government in order to support the government’s fund. All citizens of a country have the obligation to pay for taxes to the government and not only business owners.
The taxes that a business owner pays for is not standard. The taxes vary according to the number of employees in the company, kind of business operation there is, size of the business and many more. Corporate taxation is quite different from small businesses. Corporations have more taxes to take care of compared to small firms.
In business taxation, there are four standard types of taxes are commonly paid by businessmen. The taxes are: Employment tax, Excise tax, and income or Self-Employment taxes. There are many different guidelines on how he taxes are to be filed and paid. In order for one to learn more on different taxes, read below.
The first kind of tax is called the Employment tax. Many businesses with a number of employees working in it are paying the employment tax. Business owners are often required to pay for the taxes of the employees such as the Federal income tax, Social Security tax and Medicare taxes. However, this will depend largely on the kind of business you are running. Some taxes do not apply to all of the business sectors.
Income taxes also apply to business and its owners. Everybody pays the income tax and so business firms are no exception to the rule. There is an equivalent percentage of tax that businesses pay and this percentage is deducted on the annual earnings of the company. All businesses are required to pay the income tax to the government because it is stipulated in the law.
Some companies usually deduct a certain amount to the employees’ wages and that amount corresponds to the employees’ income tax. The company will be the one to forward that amount to the government agency for tax collection. Failure to pay for taxes will result to filing of tax evasion case against a person or a business establishment.
The third type of tax is the Excise tax. These are separate taxes to be paid aside from income tax and other taxes. Excise taxes are imposed on businesses that provide special services and sell special products. It is because there are special taxes on some products and this is where excise tax payment of businesses comes in.
The last kind of tax is called the Self-Employment tax. Those business owners that do not have any employees and are the sole owner of their business pay for self-employment tax. Examples of this tax are social security tax and Medicare tax and paying it helps the business owner because they will receive retirement benefits in the future. Therefore even if the individual is not working under a company, they still get retirement benefits if they pay the taxes.
If you’re unsure on what type of business taxes you’ll to pay in your business, better ask the internal revenue. They can advise you properly on which small business taxation you have to pay. Always ensure to pay for your taxes on time and do not try to escape that obligation so you will not have problems later on.
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