Having a business whether it small or big means you are ready to pay some tax. For you who run a small business, here are small business tax rate you must know and pay.
1. Income Tax
This tax is compulsory to pay by all businesses, include small businesses. To know how much the small business tax rate for the income, the owner must count the income of the business minus the expense.
Small businesses must pay 21% of the net income. This number is adjusted to the size of income which also concludes which one is big business and which one is small.
C Corporation is still in this tax rate number. So, if you are running a small business make sure you count 21% of your net income then pay the tax as a discipline and legal business.
2. Employment or Payroll Tax
The next tax that you need to pay is the employment tax. Actually, in this type of tax, there is more than 1 thing that you have to pay.
Inside this tax, you must pay social security which is 12,4% of the payroll. If you are self-employed all of this tax is your obligation. But if you have an employee, the employee must pay half of it and the rest is paid by the employee’s wages.
Then you also must pay medicare taxes. For a small business, the tax rate is 2,9%. Then for the federal and state unemployment taxes, the rate may vary.
The federal-state asks for 6,2% for the tax. The employment tax is more complicated than others. Moreover, it also related to more people’s obligations. So you have to make sure that the counting is correct.
A lot of businesses use tax and payroll planner to count the tax for them. So they just need to pay and don’t need to count it by themself.
3. Self-employment Tax
The next tax which also needs to know by a small business owner is the self-employment tax. As mention before, that employment tax is including some different point, you who work alone and earn $400 last year must pay this tax.
The tax is included in Medicare tax and social security tax. It because when you work alone, all effort and income only come to you. So the small business tax rate also must be paid by yourself.
4. Excise Tax
The next small business tax rate you must know is the excise tax. This is a tax included in the product’s price.
So basically this tax is paid by the buyer. But you as the business owner must collect it and pay them to the government.
The tax rate may vary depending on the product’s type and price. Each state usually also requires this tax so you need to update the local tax rules to know how much tax you must pay.
5. Sales Tax
The fifth tax is sales tax. Some states count this tax according to the business location. But some others use the buyer’s location as the basis of tax counting.
To know how much the sales tax you have to pay, visit the tax office. They will tell you if the state is using origin-based tax or not.
6. Property Tax
Then you also need to pay property tax if you run a business anywhere. The property tax is set by the state. So if you are buying a property and use them as a business place, the state will give you a tax rate and deadline to pay it.
Those are 6 small business tax rate you need to know. As a good businessman, you have to pay attention to every detail including tax.
It is your obligation to make the business legal. If you don’t have much time to manage and count the tax, simply hire people to count it for you.