Just as every individual must pay their annual taxes to the Internal Revenue Service (IRS),1 every business must also pay taxes. There are many different types of business taxes and how you should file your tax returns largely depends on the type of business you own. For example, some business types are taxed as follows:
- Sole proprietorship or Partnership – claim business profits and losses on personal tax returns (pass-through taxation)2
- Corporation – file separate corporate tax returns
- Limited liability company – can either opt to claim business income or losses on your personal returns or can be taxed as a corporation
For this reason, which taxes are best for you should be considered when you are choosing what type of business entity to form.
Types of business tax
Depending on the type of business and your specific operations, you may be required to pay the following types of taxes:
- Income taxes – You must pay federal taxes based on your business profits (gross revenue minus expenses). In Washington, profits are taxed by the Business & Occupation Tax
- Sales tax – If you are a merchant, you will have to collect sales tax and pay it to the state.
- Payroll tax – If you have employees, you will have to withhold and pay FICA taxes, as well as taxes for worker’s compensation and unemployment in some situations.
- Property tax – If you own property for your business, you will have to pay taxes on that real estate.
Different types of business owners may have to pay additional taxes depending on their operations.
Contact an experienced business attorney to discuss your legal needs today
If you are a business owner or are considering starting a business, the guidance of an experienced attorney on issues such as taxes can be invaluable. Do not risk getting into trouble with the IRS or otherwise putting your business in jeopardy because you made an error with your business taxes. Instead, call an experienced lawyer at the Dickson Frohlich Phillips Burgess for assistance today.
PLEASE FEEL FREE TO CONTACT OUR SEATTLE OFFICE AT (206) 621-1110 OR TACOMA OFFICE AT (253) 572-1000 TODAY.