When
you're in business, paying the right taxes at the right time is important,
but it is hard to stay on top of everything in your business and changing
tax and legislative rules and regulations. That's why so many small and
medium size businesses turn to Perquest to help keep their payroll and
payroll tax accurate and on track.
There are four general kinds of business taxes: employment taxes,
income tax, self-employment tax and excise taxes.
Employment taxes: These consist of federal,
state and local, income tax withholding and federal and state
unemployment (FUTA, SUI) tax, Social Security and Medicare taxes.
- Federal income tax must be withheld from your employee's wages,
determined by the employee's W-4 form and the methods described in
IRS Publication 15, Circular E, Employer's Tax Guide.
- Social Security and Medicare taxes pay for benefits that workers and
their families receive under the Federal Insurance Contributions Act
(FICA). You withhold part of these taxes from your employee's wages and
you pay a matching amount yourself. To find out how much to withhold and
pay, see IRS Publication 15.
- Federal Unemployment Tax Account (FUTA) is one of two taxes
generally paid by employers to the IRS. FUTA finances the administrative
costs of unemployment insurance and is reported and paid separately from
Social Security and Medicare taxes and withheld income tax. You pay FUTA
from your own funds.
- State and local jurisdictions also may have income taxes which must
be withheld from your employee's wages and states have unemployment
which is generally paid by employers.
Income taxes: Businesses file an annual
income tax return, and partnerships file information returns. Since
federal income tax is a pay-as-you-go tax, you must pay it as you earn
or receive income during the year. Employees have income taxes withheld
from their pay. Generally, you pay taxes on income, including
self-employment tax, by making regular payments of estimated tax during
the year.
Self-Employment Tax: Self-employment tax
(SE tax) is a Social Security and Medicare tax primarily for individuals
who work for themselves. Contributions to SE tax contribute to your
coverage under the Social Security system. Use IRS SE/Form 1040 to
figure your SE tax.
Excise Taxes: Depending on the type of
products, business, equipment, payment and services you offer, you may have
to pay excise taxes, which consists of several categories of taxes,
including communications and air transportation taxes, fuel taxes and taxes
on the first sale of some equipment. Review IRS Publication 510 for more
information.
Local Tax: Local authorities may also tax
personal property such as machinery, furniture, equipment and supplies. It's
best to investigate what's subject to taxes and what's not.