Small Business Taxes

Small Business Tax refers to all kind of taxes, which are required to be paid by a small business enterprise. There are many types of business tax. The size of business and the form of business determines what taxes should be paid and how. The four main types of Business Tax are:

• Corporate Tax
  Corporate tax is a form of Income Tax. Income Tax is levied on the financial earning of persons, business enterprises and other legal entities. When the tax is imposed on the income of the business enterprise, it is called corporate Tax or Corporate income Tax or Corporation Tax. All Business Enterprises whether large or small are liable to pay this kind of tax. They are required to submit an income tax return annually, which is calculated on the net earnings of the whole year. These net earnings include personal earnings, profit earnings and capital gains. But capital gains are taxed only when shares of the small business enterprise appreciate in value or when the shares are sold. And profits are taxed only when they are of significant amount. In some tax systems interest on bank savings is also considered as personal earnings whereas in some other tax systems only those earnings are considered as personal earnings, which essentially involves labor, skill or investment.

  Here it should be mentioned that the small partnership firms pay their corporate income tax in a different form compared to other forms of return that are filed by private ownership business or sole proprietorship business.

• Self Employment Tax
  Self Employment Tax has to be paid by the small business owners as they work for themselves. It is a kind of social security tax. By payment of this kind of tax, taxpayers’ social security is ensured as they get disability benefits, survivor benefits and medical benefits.Self Employment Tax is imposed in the following cases:Private Ownership Business- A person, who is running a private ownership business with a profit motive, even if not making actual profits is liable to self Employment Tax.Sole Proprietorship Business-A sole proprietor of a small business is liable to pay Self Employment Tax.

  Part-time Business-Even if a person carry a part-time business in addition to his regular job, for that part-time small business he has to pay Self Employment Tax.

• Employment Tax
  Small Business Owners are employer of a small number of employees. So, as an employer they have some Employment Tax responsibilities. So, they are liable to pay employment tax.
• Excise Tax
  Small Business Owners have to pay Excise Tax because they
  1) produce and sell certain goods
  2) operate certain kind of business
  3) use different types of machinery, goods and various amenities
  4) receive payments for certain services.

  There are another two types of Business Tax, which we cannot miss out:

• Environmental Tax
  Environmental Tax is imposed on a small business organization if its’ manufactured products or business activities are environmentally damaging. On the other hand, if the business enterprise’s produced goods or business activities are environmentally beneficial, the small business is given a tax benefit. In fact, this Environmental Tax is designed to encourage efficient resource use and to discourage business activities, which damage the environment.
• Fuel Tax
  Fuel Tax is imposed on the sale of Fuel. So, if the small business enterprise is associated with selling of Fuel then it has to pay Fuel Tax.