Business taxes are the third largest source of federal revenue, after payroll taxes and individual income taxes. Regular companies are taxed as flow-through entities and business owners must include their allocated share of the businesses’ profits in their taxable income under the individual income tax. Based on the information given by the Tax Policy Center, flow-through entities include sole proprietorships, partnerships, and eligible corporations that elect to be taxed under subchapter S of the Internal Revenue Code (S corporations).
If you are an employer, you will most likely be required to make quarterly calculations of expected adjusted gross income, taxable income, taxes, deductions, and credits for the year. Making and paying estimated taxes can be different for each business. One simple way of accomplishing this is sitting down with a tax advisor to determine which forms you should use and how much estimated tax you should be paying. Form 1040-ES is for self-employed individuals and Form 1120-W is used by corporations. Consulting with an accounting and tax advisor can help you make wiser financial decisions for the next year and maximize your overall profit.
There are many expenses that go into running a business, such as revenue statements, bank reconciliations, and managing employee payroll. It’s easy to make mistakes when you are trying to juggle too many things at once, which is why working with a company like PayTech can help you balance that. Our team helps relieve some pressure by monitoring tax changes all year round, creating monthly financial statements, and carefully planning to maximize tax savings and legal deductions. No matter how high or low your state business taxes are, planning ahead with PayTech can save you time and money that you can reinvest in your business.
