First off….what is a business tax?
The taxes you pay and how you pay them depend on the type of business you’re involved in but there are three general types of business taxes:
1. Income Taxes
All businesses have to file an annual income tax return. C corporations pay income tax at the corporate rate, while all other businesses are considered “pass-through” entities and are taxed at the individual rate.
2. Estimated Taxes
Freelancers, independent contractors and small business owners are expected to oweat least $1,000 in taxes need to estimate and pay quarterly taxes. If they don’t pay them, they can can be hit with penalties and interest.The dates to pay your quarterly tax estimates are:
|Quarterly Tax Deadlines|
|First Payment||April 15, 2020|
|Second Payment||June 15, 2020|
|Third Payment||September 15, 2020|
|Fourth Payment||January 15, 2021|
3. Self-Employment or Employment Taxes
People who are self-employed have to pay self-employment taxes: Social Security and Medicare taxes.
-You have to pay self-employment taxes if:
- Your net earnings are $400 or more.
- You work for a church or a qualified church-controlled organization that elected an exemption from social security and Medicare taxes, and you make $108.28 or more in wages. This does not apply to ministers or members of a religious order (such as nuns).
-If you have employees, you have to pay employment taxes:
- Social Security and Medicare taxes
- Federal income tax withholdings
- Federal unemployment (FUTA) tax
There are also various excise taxes depending on the type of business. This could be anything from taxes on trucks and impact to the environment or for things like sweepstakes giveaways or winnings from playing daily fantasy sports.