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The type of business you have determines what taxes you must pay and how you pay them.

Here are the four general types of business taxes;

1. Income Tax

2. Self Employment Tax

3. Employment Taxes

4. Excise taxes

First of all we have to talk about business structure because your form of business determines which income tax return form you must file. You should probably do some research before choosing your business structure.

Here are the general types of businesses;

• Sole Proprietorships
• Partnerships
• Corporations
• S Corporations
• Limited Liability Company (LLC)

Partnerships file an information return while all other business types file an annual income tax return. Most business owners pay income taxes that are set up on a quarterly basis. You will need to estimate your income as closely as possible so your business taxes paid are in the proper ballpark range. You do not want to be faced with a huge tax bill at the end of the year.

Of course, if you’re an employee, your taxes are withheld from your paychecks for you. If the withholding amount was not enough then, you will pay taxes due at the end of the year. The IRS website has some helpful information about starting a business and keeping accurate records. For more information you may want to consult Publication 583.

Estimated Tax

As I briefly mentioned above, you will most likely pay as you go along during the year. What you need to do is analyze your profits and expenses to calculate how much income you have accumulated during the quarter.

With the amount being as accurate as possible you will be able to estimate taxes due. If you find it difficult to forecast your income due to irregularity then, I would probably over estimate to prevent a large tax due at the end of the year.

Self Employment Tax

This is primarily for people who work for themselves. Your payments are actually paying for your Social Security benefits for retirement. When you retire you will be able to then collect Social Security benefits because you paid your dues while running your business. The Social Security benefits include disability and survivor benefits along with hospital insurance (Medicare).

Self Employment Taxes Verses Employment Taxes

Do not confuse the two different types of employment taxes. The self employment taxes are taxes you pay as the business owner for yourself. The employment taxes are taxes you the business owner will pay for your employees. If you do have employees you must pay Social Security, Medicare, federal income tax withholding, and federal unemployment tax (FUTA).

Excise Tax

If you manufacture or sell certain products, operate certain kinds of businesses, use various kinds of equipment, facilities, or products, or receive payments for certain services, then you will pay excise tax.

There are several different forms to consult in this category. If you operate a truck over 55,000 pounds or if you are in the business of accepting wagers or the lottery, you may be liable for paying federal excise tax. Motor fuel is a big component of the excise tax so, if you’re in that type of business I’m sure you’re aware of the taxes due.

Learn More Here

If you would like help sorting out your business structure or determining what type of taxes are due, you should visit TurboTax Online to get top notch advice on paying IRS business taxes. Whether you’re a sole proprietor or in a partnership TurboTax Online has all of the answers and guidance you need.

As you are filling out your form you will be advised with very helpful tips as you go along. You will be able to pay your business taxes online with the click of a mouse! They do all the hard work for you! Don’t you have enough on your plate already? Let the Tax Experts guide you today!