All small businesses face varied levies
By Bernard Filipiak
Operating a small business can be exhilarating, but business has its less enjoyable aspects as well. A good example of the darker, more intimidating side of business is paying taxes. But the more you know about them, the less imposing that process becomes. While your tax requirements will not diminish, at least you will be better able to successfully resolve them and get back to the many, far more enjoyable parts of entrepreneurship.
Every small business is subject to various types of federal, state and sometimes local taxes. And it’s not something you can simply put off until April 15, along with your personal taxes. For instance, many small businesses pay estimated taxes four times a year, based on the income received during certain periods. If you have employees, you must make income tax withholdings on their wages as well as withholdings for Social Security/Medicare. After that, you pay your matching share of the Social Security/Medicare taxes along with unemployment taxes. If you have retail sales, you may have to collect and remit sales taxes. And if your business has equipment or other capital assets, property taxes will come into play. The list goes on…
As you learn more about small business taxes, you’ll find that managing them may be no more onerous than other routine administrative tasks. But you need to be knowledgeable in what taxes your particular business is subject to and how to address each one. A great source for that information is the Internal Revenue Service’s Small Business and Self-Employed Tax Center (www.irs.gov/smallbiz).
There, you’ll find almost everything you need to know about small business taxes. The “Starting, Operating, or Closing a Business” section, for example, provides information on tax requirements for the various stages of a business’s life cycle, while the “Deducting Expenses” section guides you in determining what does and does not qualify as a business expense.
You’ll also find sections dedicated to self-employed individuals and businesses with employees, an A-to-Z topic index, and links to downloadable IRS small business forms and publications. The site also has the latest news on tax issues that can affect small businesses, plus a detailed explanation of tax provisions related to the new Affordable Care Act.
The U.S. Small Business Administration (www.sba.gov) is another good online source for tax help, including determining state and local tax obligations. You’ll also find links to tax departments, business registration agencies, and related resources in every U.S. state and territory.
Even with so much tax information at your fingertips, it would still be a good idea to consult with an accountant or tax attorney on specific issues. You may also consider outsourcing your accounting, tax and payroll duties to a qualified accountant and/or payroll service, putting these allimportant requirements in the hands of experts.
Bernard Filipiak is a SCORE volunteer mentor. To learn more about tax matters facing your small business, contact ashevillescore.org. SCORE — which originally stood for Service Corps of Retired Executives — is a nonprofit organization whose volunteers provide free, confidential business mentoring and training workshops to small business owners.