Types of Taxes You Pay When Running a Small Business

It’s essential to understand what kinds of taxes you must pay for your small business. These are the types of taxes categorized by agencies that you pay while you run a business.

Federal Taxes (The IRS collects the following taxes)
– Income taxes
– Self-employment taxes for the Social Security and Medicare
– Employment taxes (payroll taxes): when you have employees, you, as an employer, are required to pay and/or withhold employment taxes on behalf of your employees.

State Taxes
– Income taxes
– Employment taxes (payroll taxes)
– Sales taxes on retail goods: you, as a seller, collect the taxes from your customer and pay to the state.
– Excise taxes: some states collect taxes on certain kinds of business operations or activities such as alcohol or cigarette manufacture or distribution
– LLC, corporation or Limited Partnership taxes: Some states collect taxes on LLC, corporation or Limited Partnerships.

County & City Taxes / Fees
– Most cities or counties collect taxes by certain criteria such as gross payroll or receipts.
– Property taxes: counties impose taxes on real estate or personal property owned by business.
– Business license fee or tax registration fee: some cities and/or counties may require you to register your business and pay a registration fee.
– Business permit fee: if your business is engaged in regulated business activities such as selling alcohol, you’re require to acquire a permit for it.


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