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Business Tax – A Company Owners ‘Nightmare’?Your organization will be termed successful if an only if you have strong bottom-lines; good employee base and you are legally compliant. Meeting the legal statutory requirements would mean paying your business tax. Just as individuals have to pay their taxes, businesses are also required to pay their Business Tax to the government. One of the reasons being a business utilizes lots of resources which the governments provide like electricity, real estate and much more. Also the fact that a business has employees for sure, and a collective tax from the business just about helps the revenue of the government. Whether you are a large business or a small business certain other requirements must also be met. You are required to have an Employer Identification Number (EIN) especially if you will be providing tax statement to your employees. Typically, independent contractors, common-law employee, statutory employee are classified as employees. Although many businesses that use independent contractors do not consider them employees, if such a contractor is required to work specific hours set by the business, then that contractor is considered to be an employee of the business. As such, your business is the employer, which requires that you pay the Federal, state and income taxes for that independent contractor. Also the. Federal Unemployment Tax Act (FUTA) enforces businesses to pay FUTA tax to the government which guarantees that, should one become unemployed through no fault of their own, they will receive a percentage of their past salary for a limited period of time. Although many businesses prefer to use independent contractors as a way to spare them from paying the taxes on those employees, they should use caution in doing so. According to the government, there is a fine line between what constitutes an employee and what constitutes a true independent contractor. Should your business prefer to hire independent contractors to perform the work then the best practice is to hire them through a temporary employment agency, in which case that employee is considered to be employed by the temporary agency and they would be the entity paying the taxes for that employee. Besides all the above requirements, any business with employees, must deposit the employer and employee social and Medicare taxes. These taxes can be deposited electronically. Business Taxes are calculated on Business Expenses. If you have paid $100 as the cost of carrying your business, you have paid $100 as the Business Expense. Business Expenses are further categorized into necessary and ordinary expenses. The expenses that you incur on figuring out the cost of goods sold, capital and personal expenses. Costs which are a your initial investment when you are setting up your business are called Capital Expenses. These qualify as assets to your business and are further divided into Business Start-up, Business Assets, and Improvements. With long and detailed processes, guidelines and Internet resources, laid out for employers to pay Business Tax, it has never been easier, or more convenient to do so. |