BUSINESS TAXES

Everyone in business must keep records. These records are useful when it comes to taxes on your business and they will also help for the following:

• Monitor the progress of your business
• Prepare financial statements
• Source of receipts
• Track deductible expenses
• Prepare tax returns
• Support your claims

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TYPES OF BUSINESS TAXES

How you pay your taxes and what taxes you must pay is determined by the form of business you operate. There are four types of business taxes.

• Income Tax
• Self-Employment Tax
• Employment Taxes
• Excise Tax

INCOME TAX

With the exception of partnerships, which file an information return, all businesses must file an annual income tax return. Depending on the business entity you established determines which form is used when filing.

The federal income tax is a pay-as-you-go tax. During the year as you receive income is when you must pay. Income tax is usually withheld from employees. If your tax is not paid through withholding, or do not pay enough tax, you might have to pay an estimated tax. If an estimated tax payment is not required, you may any tax due when your return is filed.

ESTIMATED TAX

Including self-employment tax, you must pay taxes on income by making regular payments of estimated tax during the year.

SELF-EMPLOYMENT TAX

For individuals who work for themselves there is a Self-employment tax (SE tax) , which is primarily a social security and Medicare tax.  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.

Generally, you must pay SE tax and file Schedule SE (Form 1040) if either of the following applies.

If your net earnings from self-employment were $400 or more.
If you work for a church or a qualified church-controlled organization (other than as a minister or member of a religious order) that elected an exemption from social security and Medicare taxes, you are subject to SE tax if you receive $108.28 or more in wages from the church or organization.
Note: There are Special Rules and Exceptions for aliens, fishing crew
members, notary public, State or local government employees, foreign government or international organization employees, etc.

EMPLOYMENT TAXES

When you have employees, you as the employer have certain employment 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
Federal unemployment (FUTA) tax

Excise Tax

Below are excise taxes you may have to pay and the forms you have to file 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.
Form 720 – The federal excise taxes reported on Form 720, Quarterly Federal Excise Tax Return (PDF), consist of several broad categories of taxes,including the following.

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
Form 2290 – There is a federal excise tax on certain trucks, truck tractors, and buses used on public highways. The tax applies to vehicles having a taxable gross weight of 55,000 pounds or more. Report the tax on Form 2290, Heavy Highway Vehicle Use Tax Return (PDF). For additional information, see the instructions
for Form 2290.

Form 730 – If you are in the business of accepting wagers or conducting a wagering pool or lottery, you may be liable for the federal excise
tax on wagering. Use Form 730, Monthly Tax Return for Wagers (PDF), to figure the tax on the wagers you receive.

Form 11-C – Use Form 11-C, Occupational Tax and Registration Return for Wagering, to register for any wagering activity and to pay the federal
occupational tax on wagering.

Excise Tax has several general excise tax programs.  One of the major components of the excise program is motor fuel