For small business owners, tax time comes more than once a year on April 15. Depending on the structure and revenue of the business, it may have to pay taxes in up to five different categories. The Internal Revenue Service (IRS) expects business owners to keep track of the deadlines for each. You may face fines and other penalties if you miss a tax deadline. Below are the tax types that all business owners should know.
Business Income Tax Filing
All types of businesses except partnerships need to file an annual income tax return. Partnerships will file a document called an annual income report instead. However, they are not responsible for paying income taxes based on the report. That is because all profit and loss from the business passes through to each partner to report on his or her personal income tax return. The deadline for annual returns is April 15 unless that date falls on a weekend or holiday. If so, the deadline moves to the first Monday following the 15th.
Estimated and Self-Employment Taxes
Businesses with the legal status of sole proprietor or partner, as well as all shareholders of an S corporation, must make quarterly estimated tax payments if they anticipate that they would owe more than $1,000 in federal taxes at year’s end. States that collect income tax typically have similar requirements, but business owners should check to be certain. The quarterly due dates for 2019 are as follows:
- Monday, April 15, 2019
- Monday, June 17, 2019
- Monday, September 16, 2019
- Wednesday, January 15, 2020
Those required to make quarterly tax payments can send a check to the IRS or submit payment online via EFTPS, which stands for Electronic Federal Tax Payment System. Most states offer these options as well. The IRS provides more information on how to estimate quarterly taxes here. The amount that you remit should also include enough to cover your contribution to Social Security and Medicare. This is your self-employment tax and you should expect it to be higher than what a traditionally employed person would pay.
Payroll and Other Taxes
Employers must deduct federal, state, social security, and Medicare taxes from employee paychecks and deposit them in a timely manner. Business owners also need to remit payment for Federal Unemployment tax (FUTA) from company profits and match the amount of Social Security and Medicare deducted from every employee paycheck. Employers should go to the IRS website to determine when to pay these taxes according to business structure and other variables.
In addition to payroll and other taxes, you must file employment tax forms quarterly. You do not need to withhold any taxes from independent contractors, but you must send them a 1099 miscellaneous income form for any amount earned over $600 in a year.
Excise Taxes and Reporting Returns
Although excise taxes don’t normally apply to small businesses, you may need to pay them if your company sells or manufactures specific products or receives payments for specific items. This may also apply if you operate certain types of vehicles for your business.
Self-employed people and small business owners may need to file a document called an information return if they paid independent contractors over $600, received rent, or received a distribution from an Individual Retirement Account (IRA). They are due on April 15 with the annual tax return.
Keeping up with taxes can be a full-time job, but the small business accounting firm of Rickhoff & Associates can help. Feel free to contact us today at our Illinois or Missouri location to learn more.