Whether you just started a small business or have had a large corporation for years, understanding what taxes you may owe is a crucial component. While the type of business you operate determines what taxes you owe and how you pay them, there are five general types of business taxes.

Income Tax

All businesses except partnerships must file an annual income tax return. Partnerships file an information return. The form you use depends on how your business is organized.

The federal income tax is a pay-as-you-go tax. You must pay the tax as you earn or receive income during the year. If you do not pay your tax through withholding, or do not pay enough tax that way, you might have to pay estimated tax.

Estimated tax

Generally, businesses must pay taxes on income by making regular payments of estimated tax throughout the year. This includes self-employment tax.

Self-Employment Tax

Self-employment tax (SE tax) is a social security and Medicare tax primarily for individuals who work for themselves. Your payments of SE tax contribute to your coverage under the social security system. Social security coverage provides you with retirement benefits, disability benefits, survivor benefits, and hospital insurance (Medicare) benefits.

Typically, you must pay SE tax and file Schedule SE (Form 1040 or 1040-SR) if either your net earnings from self-employment were $400 or more, or, you work for a church or church organization that elected an exemption from social security and Medicare taxes.

There are exceptions for certain situations, for more information please contact our office.

Employment Taxes

As an employer, you have tax responsibilities that you must pay and forms you must file. Employment taxes include the following:

Social security and Medicare taxes, federal income tax withholding, and federal unemployment (FUTA) tax.

Excise Tax

You may have to pay excise tax if you do any of the following:

• Manufacture or sell certain products.
• Operate certain kinds of businesses.
• Use various kinds of equipment, facilities, or products.
• Receive payment for certain services.
• Environmental taxes.
• Communications and air transportation taxes, fuel taxes.
• Tax on the first retail sale of heavy trucks, trailers, and tractors.
• Manufacturers taxes on the sale or use of a variety of different articles

For more information or assistance with your business’ taxes, please contact our office at 402-932-8815.

Sincerely,

W. E. Stevens PC