No one likes to think about paying taxes. Even so, it's a necessary part of business. The IRS enjoys a significant amount of power when it comes to collecting the taxes it says your business owes.
When it comes to collecting taxes from a business, the IRS may do so from several different sources. In order to ensure that your company does not inadvertently fail to pay all of the taxes owed under all of the relevant categories, it may be beneficial to seek out the appropriate guidance. After all, this is something you certainly don't want to get wrong.
Types of taxes small businesses pay
When you started your business, you chose a particular entity structure. Based on that the IRS will require you to pay one or more of the following types of taxes:
- You may have to pay self-employment tax, which covers your contributions to the Social Security system.
- You may need to pay estimated tax on your income and self-employment tax.
- You may pay employment tax for your employees as follows:
- Federal income tax withholding
- Federal unemployment (FUTA) tax
- Medicare and Social Security taxes
- You may pay excise tax through certain IRS tax forms if any of the following apply to you and your company:
- You operate certain types of businesses
- You receive payment for certain services
- You manufacture or sell certain products
- You use various kinds of equipment, facilities, or products
Unless your entity is a partnership, which only files an information return, your company will file an income tax return. The forms you file depend on your entity structure.
Getting it right the first time
Determining what types of taxes your business should pay may not be easy to determine. Understanding the U.S. Tax Code presents a challenge to most people, and you are not expected to understand it. However, the IRS does expect you to comply with it, which means that you may want to enlist some assistance in determining what taxes your business pays and understanding how to pay them.
If the IRS does not think you got it right the first time, it will certainly let you know. Your company could end up under investigation and could even face criminal charges under some circumstances. It would not be advisable to go up against the agency alone. Before you say anything to the IRS or take any action, you may want to consult with an experienced Connecticut tax attorney.