Tax Guidance For People That Want To Start A Business

Business Taxes - Guidance For Entreprenuers Starting A Business
By Tony VM

Since I'm writing this about 1 month before tax deadline on April 15th 2012, I thought it would be good to give you guidance on some business tax issues. I'm often asked about the tax issues of starting an online business and since I've run my own businesses for many years, I've dealt with almost every tax issue that could come up.

This information applies to U.S. businesses only.

This guide deals with businesses that operate as sole-proprietorships. If you're operating as a partnership or some type of corporation, my best advice is to seek help from a qualified accountant. Corporate taxes are a complicated issue and I'm not familiar with partnership taxes at all.

I will not mention actual tax rates here, since those could change, making this information out of date. Tax laws are always changing anyway, so any information here could be obsolete at anytime. My best advice is to consult with an accountant.

It's helpful to group taxes into several categories, depending on the type:

FEDERAL INCOME TAX

Generally, all sole-proprietorship income will be figured on "Schedule C - Profit and Loss From A Business." Here, you'll list your business income and expenses. If you have income, it will be taxed at your normal income rate. For ease of estimating, I use 33% as a general figure throughout the year and put that money aside.

If you have a loss, that will be deducted from other income you have during the year, thereby reducing your taxes. If you have no other income, then you have a loss for the year and will owe no income taxes.

The key here is knowing which expenses are valid business deductions. That is a subject that is not covered here, as it would be a small book. There are other online resources for business deductions if you want to find out more.

FEDERAL PAYROLL TAXES

If you've hired employees, you are required to deduct taxes from their pay and submit those to the federal and state governments periodically, depending on the amount. If you haven't hired employees, this tax will not apply.

FEDERAL SELF EMPLOYMENT TAX

This tax is for social security and medicare and is usually paid from deductions from paychecks by employers. Since you will receive no paychecks, you will need to pay this tax on your annual return. Check the federal government website for rates.

STATE INCOME TAXES

Just as with federal income tax, you will also need to pay your state an income tax, that is a percentage of your income. Since each state's laws vary, I cannot give specifics. You'll need to consult an accountant or your state government.

STATE SALES TAXES

States usually charge a sales tax on items sold within their state and you'll need to remit that tax periodically. Check with your state regarding these requirements.

As of this writing on March 20, 2012, you will only need to charge sales tax to customers that reside in the state in which your business has a physical presence. For instance, if your business has a physical presence in OH., you would charge all Ohio customers Ohio sales tax and remit that to your state. All other customers would be exempt.

However, there is a movement in the US congress now to change these rules because many states feel their losing out on revenue. Therefore, the debate is on. Will online retailers be required to charge ALL customers sales tax and remit each amount to the appropriate state? Who knows. Time will tell. If you're an online retailer, you need to pay attention to this debate as IT WILL affect your business in the future.

You might be required to pay additional taxes specific to the nature of your business if you're in a field that's specialized, such as importing goods or others. Most people don't need to worry about this but you may want to do a search for your line of work and see if any apply.

Tony VM - The Website Warrior
Visit my website, The Website Warrior at http://www.thewebsitewarrior.com for online business tips and web business tools.

Article Source: http://EzineArticles.com/?expert=Tony_VM
http://EzineArticles.com/?Business-Taxes---Guidance-For-Entreprenuers-Starting-A-Business&id=6949402

List of Resources: Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource Resource