“Taxes are what we pay for civilized society” – Justice Oliver Wendell Holmes Jr.
Taxes are an unavoidable aspect of business, regardless of your location or profitability.
Unfortunately, governments often complicate the process, leaving many uncertain about their tax obligations. Failure to comply accurately can result in penalties and interest charges.
Welcome to today’s edition, proudly presented by Globus Finanza, where we delve into the intricate realm of business taxes, empowering you with the insights needed to confidently navigate tax season.
Irrespective of your geographical location, comprehending the spectrum of taxes that could influence your business is paramount for effective financial planning and adherence to regulations. Outsource tax preparation USA services can be particularly beneficial in navigating the complexities of tax laws.
Join us as we explore several prevalent types of business taxes:
Corporate Income Tax
The primary tax obligation you’ll encounter is the annual tax on your total income. Additionally, depending on your business structure, you may face taxation on profits, particularly for C corporations
In the United States, tax filing deadlines are as follows:
- Partnerships, or entities taxed as partnerships (such as S corporations or LLCs): March 15th
- Corporations and individuals: April 15th
- Extensions are common, granting an additional 6 months to file taxes.
However, this extension only applies to filing, not payment. Failure to pay taxes by the due date incurs interest and potential penalties.
For those receiving W2 income, taxes are typically withheld from paychecks. Any additional income from sources without withholdings must be reported in tax returns.
Sales and VAT Tax
In commerce, governments levy sales tax on transactions, while internationally, Value Added Tax (VAT) or Goods and Services Tax (GST) is common.
In the U.S., prices are often advertised pre-tax, with consumers bearing the tax burden, and businesses responsible for remittance. This practice extends to various products and is especially prevalent in Software as a Service company.
VAT or GST, similarly, imposes consumption taxes at each stage of production and distribution, prevalent outside the U.S.
Delaware Franchise Tax
Franchise taxes are fees imposed on certain types of businesses for the privilege of operating within a specific jurisdiction.
The Delaware Franchise Tax, common among C corporations incorporated in Delaware, is the most prevalent. It’s due annually on March 1st, requiring the submission of an annual report directly on the State of Delaware’s website. This report follows either the Authorized Shares Method or the Par Value Capital method.
Also Read: Top 10 Best Tax Preparation Software for CPAs and Accounting Firms in USA
Payroll Tax
The government mandates a specific way for employers to pay their employees, which involves withholding taxes from their paychecks.
Additionally, employers must contribute to various funds with each payroll processing:
Social Security and Medicare Contributions (FICA):
These funds provide retirement, disability, and healthcare benefits.
Federal Unemployment Tax Act (FUTA):
These funds offer temporary relief at the federal level to those who become unemployed.
Unemployment Insurance Taxes (UI):
Similar to FUTA, but at the state level.
Workers’ Compensation Insurance:
While not technically a tax, it’s a required insurance for employers to provide benefits to employees injured or sickened on the job.
These taxes typically amount to 15-20% of an employee’s gross pay.
Other Lesser Common Business Taxes
In business, you may encounter various other taxes, including:
Property Tax:
Imposed on real estate owned by the business, including land and buildings.
Excise Taxes:
Applied to specific goods, services, and activities, such as gas, tobacco, and liquor.
Alternative Minimum Tax:
A minimum tax imposed on individuals and corporations.
Environmental Taxes:
Levied on activities with adverse effects on the environment.
These are just a few examples; the range of additional taxes is vast and varied.
Conclusion
In conclusion, before filing taxes, it’s essential to identify the applicable taxes, influenced by factors like location, industry, and business model. At Globus Finanza, we understand the importance of thorough tax planning.
A tax calendar proves invaluable for managing and tracking obligations, and preventing penalties.
While individual preferences vary, organized tax management minimizes stress and ensures compliance with tax regulations.
- Inquiry: +1 302 532 9025
- Email: connect@globusfinanza.com
- Website: https://globusfinanza.com/
- Address: 600 N Broad Street, Suite 5 #665, Middle Town, Delaware 19709, United States
