Business Taxes

Business taxes can be a complex subject, and the way they're structured can vary from state to state. You may be required to pay a percentage or all of your business taxes according to what your business provides to the community. However, there are ways that you can minimize your obligation to the government and still keep more money in your pocket. There are many ways to reduce your tax obligations, and they start with understanding your state or province's tax structure. In this article, we'll discuss some of the options available to business owners.

There are five basic types of business taxes owed in each state. They are: Corporate franchise tax, personal income tax, gross-receipts tax, employment withholding tax, and property tax. Most people don't understand that many states have corporate tax rates lower than the national average because of the huge advantage these states receive from being members of the economic powerhouse club. While the states have varying tax rates, the tables provide an easy comparison for you so you can learn which ones might apply to you and your business.

If you're a sole proprietorship, you're not obligated to pay taxes on the business assets owned by you. But if you have more than one business asset, the majority of which is owned by other individuals, you will be required to pay income tax, corporate tax, and a portion of employment and corporate tax on your individual assets. In most states, sole proprietors must report their earnings and pay tax on behalf of their corporation. That means that your individual earnings may not be properly deducted. That's why it's important to consult a certified public accountant, who can help you understand your tax obligations and suggest solutions.

A self-employed individual usually doesn't own his business, but he may have some possession of it. This person may be subject to state and local tax liabilities, such as Medicare taxes and vehicle registration fees. Self-employed individuals may also be required to file personal income tax returns and pay Social Security taxes. Many self-employed people work for larger companies that cover many local areas. In such cases, they may be subject to the same tax rates as other employees of the company, depending on the local tax obligations. You need to know the laws and regulations concerning state and local tax obligations when you work offshore.

When you work offshore, your tax responsibilities may be different depending on whether you are a US citizen or a foreign entity. Both citizens and foreign entities are subject to all types of US federal and state tax laws and to US social security laws. For instance, the corporate tax rate for self-employed individuals is 35% whereas the rate is lower for retired persons. Self-employed individuals are not subject to the payroll tax imposed on employees, nor are they liable for Medicare tax unless they receive Medicare benefits. Business taxes are calculated differently; although, they do follow the general principle of taxing income at the individual level and then classifying it based on the portion of the income that is exempt (or taxed) by the federal tax system.

Excise taxes are collected by the Revenue Service from individuals or businesses who owe federal or state income tax and fail to remit it. Excise taxes can be assessed either individually or in combination with federal and state withholding tax, which is assessed by the employer and paid by the employee. A good accountant will be able to help you determine which type of tax you should pay, and at what rate. As an employee, you probably won't need any help with calculating your business taxes, unless you happen to be in a high-rate area, such as California. However, if you're living in Florida, you need to talk to your accountant to get all of your estimated business taxes resolved.