About Small Business Taxes
You and the many different types of taxes in the United States
The payroll tax is one you may be familiar with:
The Payroll tax, is imposed by federal and state governments, to pay for things like things like Medicare, and Social Security, and is imposed on both employers and employees. This tax generally comes out of one’s paycheck, to cover for one’s future expenses in these areas.
Your Income taxes, are imposed on the state and federal level, and are collected by the IRS. implemented in 1861 by Abraham Lincoln implemented the Income tax during the Civil War. These are basically set dependent on a person’s earned income. And the tax differs by state and federal levels.
Our Income tax has varied up an down over the years. This type of tax is sometimes called a progressive tax because it increases as the level of income increases.
Here’s a list of some types of taxes there are:
Estate Taxes and Gift tax
Customs & Duties
User Fees imposed for use of facilities
The main focus of this brief article is the Sales Taxes. Because they affect businesses. Sales taxes are sometimes called Use Tax, it’s important to any business that provides parts or materials onto their jobs.
Every state has its own tax administration that is responsible for that states laws concerning these taxes. In California it’s that State Franchise Tax Board.
These taxes are those taxes collected by the state in which your doing business in. Collecting them is responsible of your business and to pass them on to the state in which the business is in.
If the business paid the sales tax at the point of a retail purchase, then they are not responsible for paying anything to the state on that transaction.
However if your business purchased the goods on a wholesale level with a resale permit, then you are responsible for collecting the tax from the end user and passing it on to the state.
This is an area that is something often overlooked by many small businesses. The importance of collecting the tax as it can be detrimental to a business.
An example would be when you as a business owner do a job and add parts to that job that you paid taxes on those parts. It’s important that you get recompensed for that added expense.
Using an App to Keep Track
Using an app can be a good way to create your jobs on and a great way to account for the tax expense. If you add those items on the invoice you enter your tax rate for your county or state thus get paid back for the taxes you paid when requiring those parts.
The list is to exhaustive to cover it all. And if you have question on this important subject you really should contact you Tax accountant or Bookkeeper. I have added a link for you to get a fuller understanding of taxes in general here: https://en.wikipedia.org/wiki/Taxation_in_the_United_States
278 total views, 1 views today