Small Business Tax Obligations

If you are starting a small business you should know that there are many expenses and taxes that you will be obliged to pay, much like the expenses for a household for example. The United States government levies four main taxes on business. These are excise taxes, self-employment taxes, income taxes, and taxes for the employers. The more money you make the greater you will obviously be taxed. The size of your business and the number of people that you employ will also effect your small business tax obligations. Whether you are the sole proprietor of a business or involved in a partnership, you will be subject to taxation on state and federal levels.

The first step of registering your small business is getting a tax identification number. This taxation number will prove to many of the people that you work with that you are a legitimately registered business. This will make potential customers more willing to work with you but it is also something that you are legally obliged to have if you have a small business. Just as you pay personal taxes, you will have to pay business taxes. Many people hate paying taxes but paying business taxes is vital and beneficial to all small businesses. You should never consider not registering your company just because you are worried about paying business taxes.

You need to register you small business on a federal level with the Internal Revenue Service but you will also have to register your revenues on a state level. In order, to obtain a seller's permit you must be registered within your state. That is not to say that you need to register for each state you are selling you products or services in. For instance, if your company is run on the internet you do not need to have resale license for every state that you sell and ship your product to. But, if you have physical store front and want to open in a new state you will have to register with that state's revenue agency. If you already have federal registration and registration in another state, it is not very difficult to get approval in a new state.

Getting Tax Breaks

There may be many new tax obligations when you start a new business but there is also much opportunity to receive tax breaks. The government wants to reward small business in order to stimulate the economy and encourage the entrepreneurial spirit. For instance, small business are usually allowed to right off a greater amount of the costs of equipment and products that are purchased in the initial stages of starting the company. So, if you are starting a clothing store, you can write off a very high percentage of the costs of opening the store. This allows small businesses to start actually making a profit sooner. Many new companies take several years to get out of the black. Some companies are not so lucky, and they never make it past the first few years. But, if you properly write off your expenses, you can make your business grow very quickly without going into great debt.

There are many small business tax obligations. But, these tax obligations are much less severe that the taxes that are imposed on large businesses. So, if you are thinking about taking you business to the next level you should register with the Internal Revenue Service so you can take your business where you want it. The process of registering may seem daunting but it is very manageable and you should not be discouraged by the task.