Business Taxes Got You Down?

July 10, 2012 by  Filed under: Taxes 

Taxes are complicated and often affect each other in very hidden ways. While different businesses will include different types, there are four universal kinds.

Different business types will include different taxes but there are four universal types: Income tax, self-employment, employment, and excise taxes.

Income taxes are filed by all businesses except for partnerships. The income version is a “pay-as-you-go”, meaning you pay the IRS as you earn income over the course of the year. The income tax is usually withheld from employees’ paychecks. Although if there is not enough being withheld from your paycheck or there is income that is not subject to withholding, you may have to pay the estimated.

Estimated is used to pay self-employment and income taxes that have not already been paid. Sole proprietors, partners (including traditional partnerships and LLC’s) and S corporations usually have to make estimated tax payment if they’re expected to owe $1,000 in taxes or more. Corporations commonly have to make an estimated tax payment if they’re expected to owe a tax of $500 or more.

Self-employment tax is a social security and Medicare tax predominantly for individuals who work for themselves. If your net earnings are more than $400 and/or you have a reorganization organization employee income of 108.28 or more you must pay self-employment tax.

Employment taxes are for when you have employees. These include: Federal income withholding, social security and Medicare taxes and Federal unemployment (FUTA) tax. The federal income tax will be withdrawn from your employee’s paychecks and the amount withheld depends on the amount the individual employee makes. Social security and Medicare taxes pay for benefits that employees and their families received under the Federal Insurance Contributions Act. These taxes are as well withdrawn from

Federal unemployment tax is what helps pay employees unemployment compensation when they lose their job. The business pays for this out of their own funds, the employees do not pay this tax.

Find a local accounting firms with a proactive approach year end financial planning who is committed to maintaining consistent communication and the ability to identify opportunities. This enables you to be able to make timely adjustments to any life changing events as they occur.while keeping their tax liabilities to a minimum. If you started your business to do what you love, don’t get bogged down in tax issues and paperwork. If at all possible call an expert.

Kelly A. Mansdorf

Kelly A. Mansdorf The leading source for accounting in Fairfield County, CT. Providing personalized accounting and consulting services for start-ups, established small businesses, and individuals. Licensed in Connecticut and New York.
Kelly Mansdorf & Co. is one of a handful of local accounting firms with a proactive approach to tax and financial planning. We are committed to maintaining consistent communication with our clients throughout the year, allowing us to help our clients plan proactively and identify opportunities.

http://kellymansdorfcpa.com

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