2019 Small Business Resource Guide 2019 Small Business Resource Guide | Page 32

L E GA L LEGAL BUSINESS TAX REQUIREMENTS Your business will need to meet its federal, state, and local tax obligations to stay in good legal standing. Your state income tax obligations are determined by your business structure. For example, corporations are taxed separately from the owners, while sole proprietors report their personal and business income taxes using the same form. Your business is legally required to pay taxes and keep accounting records on a consistent yearly schedule called a tax year. A tax year can be the same as the calendar year. A fiscal tax year is for businesses seeking to end a 12- month accounting cycle in a month other than December, and a short tax year is if your business wasn’t in existence for an entire tax year, or you changed your accounting period. Tax laws vary by location and business structure, so you’ll need to check with state and local governments to know your business’ tax obligations. Your business structure and location will influence which taxes your business has to pay including: Federal Income Tax Every business, except partnerships, must file an annual return. Partnerships file an information return. The federal income tax is a pay-as-you-go-tax. You must pay the tax as you earn or receive income during the year. An employee usually has income tax withheld from his or her pay. INTERNAL REVENUE SERVICE 819 Taylor St. #6A14 | Fort Worth, Texas 76102 682-707-0177 To Make an Appointment: 844-545-5640 www.irs.gov 32 If you do not pay your tax through withholding, or do not pay enough tax that way, you might have to pay estimated tax. If you are not required to make estimated tax payments, you may pay any tax due when you file your return.  Self-employment Tax Self-employment tax (SE tax) is a social security and Medicare tax primarily for individuals who work for themselves. Your payments of SE tax contribute to your coverage under the social security system. Social security coverage provides you with retirement benefits, disability benefits, survivor benefits, and hospital insurance (Medicare) benefits. 33