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Tax Information part 1

by dynamaxbusiness

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Because tax laws can be extremely complex, small business owners are strongly encouraged to seek professional assistance. A good accountant or CPA (Certified Public Accountant) will help navigate through local, state and laws and also explain how to minimize future tax obligations. Even if you retain professional tax assistance, your tax responsibilities are still solely your obligation. You should understand how the various tax systems impact your business.


Although the following information is not comprehensive, it does provide an overview of

the most common business tax requirements. Business owners are required by law to withhold the following from the wages paid to employees: federal income taxes, state income taxes and FICA (Social Security) Insurance.


Income taxes will also be levied by the federal and state governments on earnings of any business. Therefore, each business must file an income tax return with both agencies. Businesses may be required to file estimated tax returns and pay estimated taxes on a quarterly basis.


For federal tax information, contact the U.S. Internal Revenue Service (IRS) You can go to IRS's website area for business taxes or call your local IRS office to receive a number of publications that are available upon request to small businesses. One of the most helpful is Your Business Tax Kit, which includes data and forms for a Federal Employer Identification Number and a tax guide for small businesses that can be ordered by calling Forms and Publications at (800) 829-3676 or by visit to your local IRS office.


Federal Self-Employment Tax

Everyone must pay Social Security Tax. If you are self-employed, your Social Security contribution is made through the self-employment tax. You will need to calculate how best to report earnings and pay your business taxes.


Contact the IRS at (800) 829-1040, visit your local IRS office, go to the Official IRS Web site for more information. The IRS may seem like a complicated maze, but there are publications, counselors and workshops available to help you sort it out.


Unemployment Insurance Tax

Businesses are required by the state to pay unemployment insurance tax if the company has one or more employees for 20 weeks in a calendar year, or it has paid gross wages of $1,500 or more in a calendar year. Go to your state home page to check the figures for your state. Unemployment insurance must be reported and returns made to the state.



An Employer Identification Number, (EIN, sometimes called Federal Tax ID Number) is a nine-digit number assigned by the IRS. EINs are used by employers, sole proprietors,



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