Identifying The Different Kinds Of Business Taxes
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.There are various taxes that are paid by business owners. The tax is dependent on the kind of operation the business has and also its size. Another thing that can affect the kind of tax the business pays is the number of workers working in the company. Large business taxation has a different scheme than that of small business taxation.
There are 4 standards business taxation that is stated in the law of taxation. These are the Excise tax, Self-Employment tax, Employment tax, and Income taxes. Various guidelines govern the tax payment scheme of each type of tax for business. To know more on the four kinds of business taxation, read the information below.
The first type of tax that businesses pay is the Employment tax. In a business that has many employees, the employers have the obligation to pay for some of the taxes of their employees but it depends on the type of business. Examples of employee tax that business employers pay are: Social Security taxes, Federal income tax withholding, Medicare taxes and many more.
The second type of tax that employers pay for is the Income tax. All individuals pay for income tax especially workers and businesses are no exception to that obligation. The earnings of a company every year are computed and deducted with certain percentage for tax which is set by the government. The company must pay for income tax because it is the law of the state.
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 kind of tax is known as the excise tax. Not all businesses pay for this tax because it's considered as a special tax. This is different from all standard taxes that companies pay. Special goods and services require some special taxes. Those businesses that offer special services and goods need to pay the excise tax to the government.
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 do not know what kind of small business taxation your business should pay, be sure to ask experts on the matter first or go to the internal revenue. They will give instructions and information on which business taxes to pay for. Be sure to pay for your business taxes on time so that you will not have any problems later on.
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