Navigating through business tax obligations of New York state is really important, not just to comply with the tax laws but also to keep the financial performance of the business at an optimal level and avoid unnecessary tax penalties that can be costly. A CPA in St. James, Long Island, can make the whole process a lot less hectic for a business owner. To better understand this, let us look at some of the basics of business tax obligations.
Types of Business Taxes
There are numerous taxes levied on businesses that are broadly categorized as local, state, and federal taxes. The major ones include:
- Income Tax
All businesses have to file income tax returns, except partnerships, which file information returns. The business structure essentially defines the particular tax rates and forms applicable.
- Self-Employment Tax
LLC members, sole proprietors, and partners often have to pay self-employment taxes that cover Medicare and Social Security. Self-employment tax is necessary because it gives you eligibility for such benefits post-retirement.
- Employment Taxes
If you have employees for your business, you are responsible for numerous employment taxes such as federal income tax withholding, social security and Medicare taxes, and federal unemployment tax.
- Excise Tax
The excise tax does not apply to all businesses and is only applicable to some particular types, such as alcohol, gasoline, or tobacco-selling businesses. Moreover, it covers certain products and activities that include air transportation, environmental taxes, and communications.
- Sales Tax
Sales tax, as the name suggests, is imposed on sales of goods and services. Sales tax needs businesses to collect and redirect to the specified authorities as it has both local and state tax elements.
Business Tax Deadlines
There are deadlines for the complete submission of every tax in the state, including business tax. It is essential to make sure you file and submit your taxes before the deadline to avoid costly penalties, and last-minute tax preparation should also be avoided.
Deductions and Credits
For any business or even individual, it is essential to have a good understanding of deductions and credits. There are numerous deductions and credits available that can be beneficial to minimize tax burden by a significant margin. Some standard deductions are business expenses such as salaries, rent, and utilities. Some tax credits for businesses include R&D credits, employment-related credits, and energy efficiency incentives.
Staying Informed
Tax laws in the state keep changing now and then, which makes it extremely important to keep yourself up to date with the changes to make sure your business is in complete compliance with the latest laws.
Choosing a Tax Professional
Some business owners handle their taxes all by themselves, but it can be stressful and time-consuming. Thus, it is suggested that a qualified CPA be hired to take care of tax-related concerns, and a CPA also brings numerous other significant advantages to the table.