Only about 1% of individuals get audited by the IRS each year. But that number jumps up to 2.5% when it comes to small businesses.
With this in mind, it's very important for small business owners to make paying business taxes a top priority. If you fail to pay business taxes or don't pay your fair share of taxes, it could trigger an audit and put your company in a tough spot.
Today, we're going to talk about some of the things you should know about paying taxes during tax season every year. It'll make filing taxes on behalf of your small business easier and so much less stressful than it would be otherwise.
Here's our business owner's guide to paying business taxes.
Understanding the Types of Taxes Businesses Pay
There are a handful of different types of taxes that small business owners must pay. You should make sure you're familiar with each type so that you don't inadvertently neglect to pay one of these types of taxes.
When paying business taxes, you'll need to set aside money for:
- Income tax
- Self-employment tax
- Employer tax
- Excise tax
- Estimated tax
As a small business owner, you may also have to withhold taxes from your employees and take care of payroll taxes during tax season. It'll be imperative that you collect these taxes and set them aside for later on.
Knowing What May Happen If Business Taxes Aren't Paid
Paying business taxes isn't an option for small business owners. If you don't pay your taxes on time and send enough money to the IRS, they might hit you with a host of penalties.
If, for example, the IRS audits your business and discovers unpaid payroll taxes, it could turn into a huge headache for you. You'll be subjected to some combination of fines and penalties that could force you to pay the IRS even more than you would have had to if you had just paid payroll taxes in the first place.
Getting Help With Paying Business Taxes
If you're very good with numbers, you might be able to tackle your business taxes on your own. But if paying business taxes confuses you, you should hire an accountant who has experience in this particular field to assist you.
A good accountant will ensure you're making the most of the deductions available to you. They'll also get your taxes taken care of on time so that you're able to file them before tax season ends.
Stay on Top of Your Business Taxes
Paying business taxes isn't going to be very much fun. You aren't going to love shelling out your hard-earned money to the IRS.
But sending the IRS money to cover your taxes is necessary. You could put your small business into a world of trouble if you don't take the time to get your taxes squared away. Use what you've learned here to tackle your business taxes from here on out.
Find more business tips by browsing through our other blog articles.