What to Consider About Filing Changes

Author: Keith Huggett

Launching a new business can be exciting, rewarding -- and scary. Taking charge of your own future is a wonderful adventure and can bring many positive changes to your life. In order to increase your chances for success, though, you should understand the financial obligations associated with your new company, including taxes.

When you move from W-2 employee status to small business owner, you become responsible for much more than personal income taxes. Here are five types of taxes you need to know about before you start:

Employment tax

If you plan on hiring staff, you will need to pay Social Security, Medicare, unemployment, federal withholding and state and local employment taxes. In addition to withholding from employee checks, your new business will have to match Social Security and Medicare funds. It is essential that you budget for these expenses and make employment tax payments on a regular basis. The schedule is usually defined by the size of your staff and payroll.

Excise tax

If your new business will manufacture or sell certain types of goods, you may be liable for excise taxes. This includes environmental and clean air taxes, fuel taxes and taxes on the sale of industrial vehicles.

Sales tax

In most areas, businesses charge sales tax to be paid to local and state governments. You will need a way to track sales and related taxes so you can complete necessary forms and remit these funds regularly.

Property tax

If you plan to purchase buildings, vehicles or machinery, you will have to pay property taxes. Depending on the area where you base the business, you may have to make payments quarterly, biannually or annually.

Business income tax

You will also have to complete a business income tax return. To avoid massive tax liability, you can often reduce income tax burdens through expense deductions.

Overwhelmed before you even open your doors? By beginning this journey with accurate, comprehensive records, you can keep tax-related work from overrunning your daily operations. For professional, cost-effective help putting the pieces of your tax puzzle together, contact us at The Tax Office today. We'll manage your tax obligations and let you concentrate on building your new business.