Upon Starting My Own Business, What Taxes Do I Have To File For?

All business owners must pay income tax on profits received, which pass through from company to personal tax return. Depending on your company’s structure, you may also need to pay other taxes:

  • Employment-related taxes
  • Self-employment tax
  • Excise tax related to alcohol, tobacco or gasoline
  • Property tax

Many states also require businesses to collect and pay sales tax.

Some taxes are due annually, but most companies are required to make quarterly estimated tax payments on the amount of profit they expect to make. Before filing – unless you’re a sole proprietor with no employees – you will need to apply for an EIN, or employer identification number.

What Is Self-Employment Tax?

Small business owners pay self-employment taxes for Medicare and Social Security. Employees have these expenses deducted from their paychecks, but as a self-employed business owner, you pay them directly.

What Employment Taxes Do I have To Pay?

After getting an EIN, your company is ready to hire employees. With that step comes certain tax responsibilities:

  • Income tax withholding: You must withhold the necessary amount of income tax from your employee’s paychecks each month.
  • FICA taxes: This refers to social security and Medicare taxes withheld and matched for your employees.
  • State and/or federal unemployment taxes
  • State and/or federal workers’ compensation
Do LLCs and Corporations Pay Income Taxes?

If you decide to start an LLC for liability protection purposes, the IRS views it as either a sole proprietorship or partnership when it comes to taxes. Profits – or the portion of profits that correspond to you – pass through the company to your individual tax return.

S-Corporations operate the same way, passing profits directly to shareholders to be reported on their individual tax returns. C-corporations, however, are taxed both on the corporate level and the personal level. Owners of corporations do not pay self-employment taxes, but the corporation withholds Medicare and social security payments for them as employees.

Experienced Advisors Are a Huge Help

Applying for EIN is necessary In order to form a corporation – even a single-member corporation – for any business transactions. Like many aspects of tax law, you don’t need to tackle EIN applications or corporate filing by yourself. Contact our helpful experts for assistance instead.