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Understanding Business Taxes

Updated: Jan 5, 2022

Benjamin Franklin famously said, “In this world, nothing is certain but death and taxes.” You can’t do much about the death part, but you do have some choice when it comes to taxes. It’s perfectly legal to use all available means within the tax code to reduce your tax liabilities. To keep business taxes manageable, it’s important to understand the types of business taxes and the filing requirements for your particular business structure.

Types of Business Taxes

Depending on your business structure and whether or not you employ workers who meet the legal definition of employees, you may have to deal with some combination of income taxes, estimated taxes, self-employment taxes, and payroll taxes.

Tax Filing Requirements

Your business entity – sole proprietorship, partnership, C Corporation, S Corporation, or Limited Liability Company (LLC) – determines which taxes you have to pay as well as how and when you must file those taxes.

Payroll Taxes

Having employees adds some complexity to your business tax obligations. You must withhold federal income taxes and FICA taxes from your employees’ wages, pay your employer portion of FICA taxes, and pay unemployment taxes. You may have withholding for certain employee benefits. And you may have state payroll tax obligations as well.

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