2021-2022 Small Business Resource Guide | Page 33

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 .
Corporate Income Tax Texas Franchise Tax
Texas does not collect corporate income tax but does collect a franchise tax .
The Texas Franchise Tax is a tax imposed on each taxable entity chartered / organized in Texas or doing business in Texas . The Texas Franchise Tax applies to partnerships ( general , limited and limited liability ), corporations , limited liability companies , business trusts , professional associations , business associations , joint ventures and other legal entities .
Self-Employment Tax
The Texas Comptroller ’ s Office provides more information on franchise taxes .
Self-employment tax ( SE tax ) is a social security and medicare tax primarily for individuals who work for themselves . It is similar to the Social Security and Medicare taxes withheld from the pay of most wage earners .
You must pay self-employment tax and file Schedule SE ( Form 1040 or 1040-SR ) if your net earnings from self-employment is $ 400 or more .
33