Paying taxes as a business owner is very different from paying taxes as an employee. Many of the details are determined by the structure of your business – whether it’s a sole proprietorship, an S-corp, etc.
That said, here are some commonalities between all of them, and some general tax terms with which a business owner should be familiar.
- Income tax – If you own a business, you will likely be required to file an annual income tax return.
- Estimated tax – S-corps, sole proprietors, and partners who expect to owe $1,000+ when they file their tax return usually make estimated tax payments.
- Employment tax – If you employ people, there are taxes related to having them on payroll. Medicare tax, Social Security tax, federal unemployment tax, and federal income tax withholding are all examples of this.
- Excise taxes – If you need to purchase certain goods to run your business, a tax will be included (usually in the price of the product). Manufacturers are also often under some kind of excise tax law, as well as those who offer certain kinds of services or use certain kinds of equipment.
Business owners are also responsible for collecting sales tax from their customers, which is to be included in the price of physical goods that are sold by the business. (This of course does not apply to businesses operating in states that do not collect sales tax.)
This generally applies to businesses with a physical location – in legal terms, a “nexus” – such as a retail shop.
Licensing & Permits
Any business owner is going to have to deal with a wide variety of state regulations, licenses, and permits. You want all of your bases covered in this regard – failure to do so can result in fines and even the revocation of your ability to legally operate your business.
The first and most obvious example of this would be attaining a basic business license, but there are many other licenses and permits you may require, depending on what kind of business you own.
The government regulates against untrustworthy or inaccurate advertising – if your advertisements are purposefully deceptive, you can face legal consequences. There are also laws applying to customer testimonials, as well as trademark laws by which a business owner needs to abide.
Labor & Employment Law
Business owners must abide by regulations set out by the Department of Labor, for example:
- Wages & hours – Examples would be minimum wage and overtime pay.
- Employee benefits security – There are many requirements for businesses that offer welfare benefit plans or pension plans.
- Unions – Businesses that have union employees may have certain requirements in terms of owner-union member relations. Certain reports may need to be filed as well.
- Family & medical leave – According to the Family and Medical Leave Act (FMLA), business owners who employ 50+ employees are required to grant 12 weeks of job-protected leave to employees in the case of birth or adoption, or for when a spouse or close family member is seriously ill.
- Workplace health & safety – OSHA requires that businesses “provide their employees with work and a workplace free from recognized, serious hazards.”
- Equal opportunity – The Equal Employment Opportunity Commission makes it clear that one cannot discriminate during hiring on the basis of race, sex, age, religion, disability, etc.
Non-US citizen workers – Anyone you hire must be legally eligible to work in the United States.
A Business Attorney Will Help
There are many times when a business owner can avoid a great deal of trouble – both legal and financial – by hiring a business attorney. These attorneys are well-versed in all areas of business law, and can help you prevent legal problems before they arise. This is what you want from a business attorney – someone who can prevent legal problems from occurring in the first place.
If, in the unfortunate case that legal problems do occur, a business attorney can represent you in court and defend your case, mitigating legal and financial damage as much as possible.
Business attorneys can help in negotiations, writing contracts, tax filing, and help you avoid breaking anti-discrimination laws.
It’s always a good idea to retain a business attorney so that you can get the most from your business.