ASK MICKEY, CPA
QUESTION: How Often Does a Business Pay Taxes?
ANSWER: There are Different types of Business Taxes such as income taxes, sales taxes, and payroll taxes. Each of these types of taxes have different tax deadlines.
The type of taxes that apply to a small business owner are:
1. Income Taxes & Estimated Taxes
2. Payroll Taxes
3. Sales Taxes
4. Unsecured Property Taxes (Form 571L)
*Income Taxes & Estimated Taxes
The IRS requires business to file their income tax returns once a year, but it’s important to pay your taxes as you go. If you don’t pay taxes on timely basis, you may be subject to penalties and interest.
The IRS (Internal Revenue Service) requires most small business owners to pay taxes on quarterly basis if they owe $1000 or more in taxes.
If you are self-employed as a sole proprietor your taxes may include Federal Tax, State Taxes and Self-employment taxes (15.3%). Do you know you can incorporate as S Corp and save Self-employment taxes?
If you overpay your estimated taxes during the year, then any additional taxes paid can be refunded back to you or you can choose to apply those to next years estimated taxes.
*Payroll Taxes
Depending upon how many employees you have and how much you owe in payroll taxes, IRS will have you pay taxes on Quarterly, Monthly or Semi-Monthly basis. You file form 941 and 940 for payroll taxes and you can pay your payroll taxes via EFTPS
*Sales Taxes
Most States have Sales tax that is charged when you purchase items either through retail or online. This sales tax is charged on the total amount can ranges in many states between 7 to 9 percent.
Small Businesses such as retail stores and restaurant among many are required to collect this tax on States behalf and submit to State.
Depending upon the total amount many businesses file quarterly returns pay this on Quarterly. In some cases, monthly prepayments are required if amount of sales tax is very large.
If a small business has very small amount of sales tax collected, sometimes state will allow them to file and pay on yearly basis.
For example, State of California has sales and used tax and these returns can be filed online along with making the payment
*Unsecured Property Taxes (Form 571L)
Many Counties charge Unsecured Property Taxes on Personal Property such as Tables, Chairs, Counters, Equipment and so on. Businesses are required to file Form 571L and pay their taxes on yearly basis.
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