The federal taxes your business may be subject to depend on your business’s structure (C corporation, S Corporation, LLC, etc.) and many other factors.
Here are four types of federal taxes that small businesses are often subject to and where to find more information on them from the IRS. (We also recommend you always discuss your specific business with a tax attorney before making any tax-related decisions.)
Income taxes are the most common – required for all individuals and businesses alike (except partnerships, who file an informational return). Federal income taxes are pay-as-you-go, meaning they are required to be paid as you receive income throughout the year. This is done through either withholding or estimated tax – filing forms depend on the business structure.
Refer to this article from the IRS on Business Structures for more information on income tax filing forms.
Next, the self-employment tax is primarily for those who work for themselves – its purpose is to pay for Social Security and Medicare benefits, akin to the payroll tax that is withheld from a worker’s paycheck.
Self-employment taxes are required if net earnings exceed an amount pre-determined by the IRS or if more than a pre-determined amount was earned working for a church (excluding the clergy) that elected not to withhold this tax from your paycheck.…amounts are subject to change.
See this article from the IRS for more information on Self-Employment Taxes.
Small businesses with employees are required to pay employment taxes on behalf of their employees. These include payroll taxes, withholding (income) taxes and federal unemployment insurance taxes.
Find more information from the IRS here: Employment Taxes for Small Businesses
The excise tax is a fourth type of business tax. It is required depending on various conditions, such as if you manufacture or sell certain products, operate a certain kind of business, use various types of equipment, facilities or products and if you receive payment for certain kinds of services. You’ll need to check whether your business meets any of the current conditions as defined by the IRS. Different forms are also required for different excise taxes.
Get a general idea of excise taxes, including the conditions in which they’re required and the associated reporting forms, from this article on the IRS site.
Each individual state has its own tax structure and filing requirements for small businesses. We recommend checking with a tax attorney familiar with tax issues in the state where you’re forming a corporation.
Find more information about federal business taxes at the IRS web site. And before forming a corporation, be sure to consult with a lawyer and/or tax attorney to understand tax issues surrounding small businesses so you can make informed decisions.