Business taxes, like your personal taxes, are a necessary
evil. Business tax requirements vary
greatly depending on the state, county, and city in which your business is
located. While we can’t cover even a
fraction of what you will need to know about your business taxes, here are some
basics.
Taxes are typically levied by the Federal government, your
state government, and your local government – city or county or both. The Federal government of course works via
the IRS, and collects taxes on corporate and individual income. States typically collect taxes on business
income, sales, and payroll. Cities
and/or counties can collect any number of things, including property, gross
receipts or payroll, sales, etc.
Just like with your personal income taxes, the prime goal of
business taxes is to keep as much income as possible by using as many
legitimate deductions as possible. To
keep out of trouble, it is important to know which deductions are actually
legitimate, and know that the rules change from year to year.
It is important to know that when you own a business, your
personal income taxes will be handled differently than when you worked for a
company that took care of them for you.
And requirements are very different depending on your business structure
(see the second blog in this series for more information on business
structures). Income, expenses, and
reporting structure will vary according to whether you are a sole proprietor, a
partnership, or a corporation, and it is important to know what you need to do
in each situation.
The most important thing to remember is that there is no
logic in the tax system, and there is little use in trying to find some. Suffice it to say that you will be taxed in a
number of ways, and unless you are a tax specialist yourself, you will be wise
to consult someone who is. Ask friends
and colleagues for recommendations on a good accountant, and meet with several
until you find someone you like and trust.
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Kim Luedke is Co-owner of ProfessionalEdge Associates, offering a wide range of marketing and support services to businesses that want to increase their success, but aren't in a position to add to their staff.
Kim Luedke is Co-owner of ProfessionalEdge Associates, offering a wide range of marketing and support services to businesses that want to increase their success, but aren't in a position to add to their staff.
