Many business owners focus primarily on their income tax burden. But income taxes are actually a fairly small portion of the taxes that most businesses pay. Because business owners are often familiar with these different forms of taxation, issues can arise. Here are a few of the most common issues that occur when dealing with non-income-related taxes.
Payroll taxes can be very complicated. More importantly, they are also highly regulated; any mistakes that occur regarding employee paychecks could ultimately cause some serious issues for a business. Payroll checks often need to have social security, medicare, retirement funds, and more deducted. A single mistake could result in all of the paychecks being the incorrect amount.
Wholesalers have special tax considerations compared to other businesses. Wholesalers generally only pay taxes on their revenue; the cost of goods sold is deducted from the amount of the goods that they sell. When it comes to sales taxes and other revenue taxes, wholesalers need to be especially careful to avoid over-payment.
Sales taxes are paid separately from income taxes. Some states additionally have General Excise Tax, which operates similarly. Sales tax has to be paid based on revenue and usually needs to be paid on a monthly or quarterly basis. Sales tax itself can change year-over-year, depending on the area. Sales tax also doesn't just vary by state; each locality has its own type of sales tax.
There are some products and services that have additional taxes attached. Cigarettes and alcohol, for instance, have additional taxes that need to be paid out. Businesses that deal with these types of "vice taxes" will need to calculate it into their tax projections.
Depending on the structure of an organization, it may either be taxed once or taxed twice. Company owners need to be aware of the ramifications of their company structure before they make a decision regarding which company structure they would prefer.
All of a company's taxes need to be paid on time or the business could potentially face severe penalties and fines. A tax accountant from a company like Hoff John CPA PC can help a business ensure that they are paying the right amount in taxes and that they are meeting all of their relevant tax deadlines. Otherwise, a company could find itself with a significant tax burden at the end of the year, even if it's been steadily paying its income taxes.