One thing that every business owner must remember is the role that taxes play in their business. Just as employees must pay taxes when they work for a company, so too, do employers need to pay taxes when they own one. However, in addition to simply having to pay federal and state taxes, those who start a business, as well as those who continue to operate them, are required to learn extensively about taxes. These business owners are responsible to complete a number of tax-related tasks in order to maintain their business’ standing in the workplace. Furthermore, if you are a business owner and you do not learn about these necessary steps and thus do not complete them, you will incur serious consequences from the federal and state governments. But there is good news for you when it comes to finding out information about the taxes associated with running a business, and the good news is that all of the information you need to know is provided in the sections below. So if you own your own business and want to learn about the taxes that you have to pay and how you must pay them, take a look at the following comprehensive tax guide.
- Get a business tax identification number: The first tax step you must take as a business owner is to apply for a tax ID number, which is also known as an employer identification number or EIN. This number functions to identify your business to the federal government. As for how you can apply, the easiest way is to go online to the official Internal Revenue Service website and follow the necessary steps. However, before you do so, be sure to contact your state department to verify whether you need a number or charter.
- Find out when your tax year begins: As a business owner, you can choose to begin your tax year on a calendar year (starting January 1 and ending December 31), or you can begin on a fiscal year (staring on the last day of any month that is not December and ending 12 months later). Additionally, in the event you want to change your tax year, you may be able to do so by contacting the IRS.
- Find out what state taxes you must pay: Once you have your tax ID number and you know when your tax year begins, your next step is to figure out what state taxes you will have to pay. Most states require that businesses pay income taxes and employment, but there are also some states, such as California and New York, which require these businesses to pay for temporary disability insurance. So be sure to find out your state requirements before you go any further.
- Find out what federal taxes you must pay: The next thing you need to discover concerns your federal tax obligations. The four different types of taxes you may have to pay include income tax, excise tax, self-employment tax and employer tax. And the taxes that you will have to pay mainly depend on what kind of business structure you have.
- Learn how to file and pay business taxes: The final thing you need to learn about business taxes is how to file and pay them when the time comes. Fortunately, business owners now have the option to do both online. Simply visit the IRS website for electronic filing and payment options.