Saturday, 5 Dec 2020
Business

What Small Business Owners Need to Know About Sales Tax?

Are you a small business owner and looking for help with sales tax? First, you need to get well-prepared and know about the sales tax obligation. Any mistakes in remitting or reporting the business taxes —and missing out on your scheduled payment —will result in huge penalties and even criminal charges on you. So, you need to be very careful about it and make sure you follow the guidelines properly.

There are many pitfalls, and one can easily forget something here and there. Let us find out what business owners have to know about their sales tax and if they need any help with sales tax.

Different Kinds of Small Businesses Tax

Let us look at the different types of taxes that the small business owner needs to pay on time. Not each business is liable to pay tax, but here is the list of some common taxes that you would like to run in as the business owner.

Sales tax

Sales taxes are an important tax that the business need to pay, especially if your business sells products or some kind of services, you are subject to pay the sales tax. Most businesses pass this burden of the local or state tax on the customers, but it is the responsibility of the business owner to gather the right tax and send it across to the right tax authority. Suppose you fail to collect any sales tax, still you are potentially on a hook to pay it.

Income tax

Businesses who earn good profit needs to pay income taxes. Most of the states impose their own business income taxes, with identical rules. But, the specifics differ as per the type of business that you select to run, however, income tax makes up a substantial part of the overall income tax burden.

Self-employment taxes

Suppose you are running your business as the sole proprietorship, partnership, and limited liability firm that is taxed as the partnership, then are liable to pay the self-employment taxes over your business income. It is a bit different from the pure income tax that we mentioned because the business does not pay any kind of tax. But, self-employment tax will be paid by owners individually, generally proportionate to their business interest.

Payroll taxes

Suppose you have employed some employees, then you are liable to pay the payroll taxes for Medicare, Social Security, and even unemployment insurance. You have to withhold the right payroll taxes from the employees’ paychecks, and add in an employer portion of every tax.

Property tax

Most of the local and state government entities will charge the businesses tax over the property that they own. It includes tangible property and real estate property.

Various other taxes

There’re a lot of other taxes that will apply in some cases and they are excise taxes over some goods like alcohol and fuel, dividend taxes, gross receipts taxes, and more. But, these taxes are not meant for all types of small businesses, just selected ones.

Rethink tax compliance: can you find better ways?

Managing your sales and manually use tax will be quite challenging, particularly for start-up businesses. With many states now imposing the sales tax collection over the remote sellers, it is quite overwhelming. Suppose your business is growing, then your tax obligations may grow as well. Like other business features, sales tax compliance requires a proper strategy.

To understand sales tax compliance might be a bit complicated, and it is not possible to get any easy soon. However, that does not mean it will eat our resources & be one big burden over your business. There are ways you can solve this, you just have to do proper research, and reach out for expert help in case required for the sales tax calculations, registrations, or filing.

Conclusion

Having a reliable solution for sales tax prepares you with future tax obligations. It is very important that you find the right solution that will grow with the business, and starting with the affordable cost for the low volume businesses & ending with the strong enterprise platform when you grow in various states. Thus, make sure you learn about the type of tax that you are liable to pay and find the solution.