Types Of Taxes For Small Businesses
When it comes to taxes paid by small businesses most of the attention is focused on income taxes because they take such a large chunk of profits. But income taxes are far from the only taxes that businesses have to pay so its important to be informed of all possible taxes.
Most businesses are also responsible for paying property taxes and payroll taxes. Some pay excise taxes and franchise taxes as well . Businesses in all but a handful of states must collect sales taxes from customers and then report and pay them to the proper authorities.
Your own business tax responsibility depends on a number of factors, including its location, business type, corporate structure and industry. Different states and municipalities have different tax requirements, as do different industries and business setups, which you must be aware of before starting a business.
Here are a few taxes that many small businesses have to pay:
How Do I Apply
To receive unemployment insurance benefits, you need to file a claim with the unemployment insurance program in the state where you worked. Depending on the state, claims may be filed in person, by telephone, or online.
- You should contact your state’s unemployment insurance program as soon as possible after becoming unemployed.
- Generally, you should file your claim with the state where you worked. If you worked in a state other than the one where you now live or if you worked in multiple states, the state unemployment insurance agency where you now live can provide information about how to file your claim with other states.
- When you file a claim, you will be asked for certain information, such as addresses and dates of your former employment. To make sure your claim is not delayed, be sure to give complete and correct information.
- It generally takes two to three weeks after you file your claim to receive your first benefit check.
What Small Business Owners Need To Know About Unemployment
If your small business operates on razor-thin margins, the smallest budget fluctuations can put a struggling company in the red. Sometimes, making the hard decision to lay off an employee has unexpected consequences beyond the emotional and financial tolls.
When you look at the bigger picture, high unemployment in your state and across the nation can impact the way people spend money, plan or think about the future. But how do unemployment rates or unemployment taxes affect your company? Well take a look at unemployment insurance, employer taxes and how they can affect your bottom line with this unemployment Q& A guide for small business owners.
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How Is Unemployment Insurance Funded
Unemployment insurance is funded by taxes on employers, such as the Federal Unemployment Tax Act and various state taxes. FUTA charges 6% of the first $7,000 of each employee’s wages, although this is offset by a 5.4% credit for on-time tax payments.
Some states pay for unemployment benefits by debiting the former employer’s UI account, or by raising the employer’s UI taxes in future years. Since employees are usually not eligible for UI if they quit voluntarily, some employers may pressure their employees to resign rather than fire them.
An Overview Of Small Business Taxes
Tax liabilities can differ depending on business structure, location, and several other factors. Sole proprietors, for example, may face a 13% federal tax rate, while small partnerships and S-corporations pay nearly 24% and 27%, respectively.
Knowing where your small business stands with tax rates is crucial to filing the proper taxes at the right time. Not only must you be concerned with income tax but other costs such as self-employment and excise taxes. With legal implications for your business, taxes can make or break your success.
Here are several things to be aware of for your small businesss taxes, including how to file and what to pay.
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Business Insurance Agency In California
PJO Insurance Brokerage has maintained its integrity by delivering the best California business insurance solutions to their clients. We have professionals in each field that can answer your questions about the differences in the types of business insurance. We care about protecting the businesses in California with excellent coverage while delivering competitive rates for savings.The business insurance that a bakery business needs may include commercial general liability with products insurance and commercial umbrella insurance as well as property insurance to cover their equipment. A roofing company may need general liability and inland marine insurance to cover their equipment at the job site. A nursing home may need California insurance, liability insurance, professional liability, and property insurance amongst other types of available coverages.
Coverage For Independent Contractors And Subcontractors
Most states require businesses to provide workers comp insurance for independent contractors and subcontractors who dont have their own coverage. Avoid covering contractors by collecting their certificate of insurance before doing business with them. If they dont have workers comp insurance, youll be charged for their coverage at a similar rate of their total pay based on the type of work they do.
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What New Business Owners And Entrepreneurs Need To Know About Unemployment Insurance
Unemployment insurance is often one of the most confusing and potentially difficult issues for a new business owner or emerging entrepreneur to navigate.
This is because unemployment insurance speaks not only to how attractive a companys compensation package will be to new employees, but it also ensures that your company is adhering with stringent state and federal laws.
No matter what state you operate in, you will almost certainly be required to pay unemployment insurance for at least some of your employees. Not all workers, however, will qualify for unemployment insurance, so you will not be obligated under state or federal law to pay unemployment insurance for particular workers. The conditions that make certain employees ineligible for unemployment insurance vary from state to state, however, you will need to consult with a good attorney or review state unemployment laws to ensure your company is in compliance with the law.
Getting Started On The Right Foot
Fraud isnt the only annoying thing about taxes. If you dont make the right preparations, the entire process can be very frustrating. As you work toward your filing date, keep these prep tips in mind:
- Figure out if you want to have a professional do it. Last year we made our case for why you should never file your small business taxes on your own. We stand by that.
- Be ready for an audit, even if you dont get one. You should file your taxes like youre planning on the IRS knocking on your door the next day to look at the books.
Most importantly, get started now. A lot of these scams require the victim to be a little out of touch with their current tax situation. If youve already filed and got your refund, then you wont fall for half of the tax scams out there.
Tax season is stressful, but less so when you keep your finances separate from fraud. Hopefully, these tips will help keep your personal information safe.
If you think the scammers already got to you, then reach out to the IRS immediately. You can call them at 800-829-1040. You can also stay up to date on the latest tax scams and consumer alerts here:
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How To Get My 1099 From Unemployment To File Taxes
Many taxpayers are unaware that the unemployment income they received is taxable, just like earned income. The key difference is that unemployment income is taxed at a lower rate. Also, thanks to the American Recovery and Reinvestment Act , the first $2,400 of unemployment income is untaxed. In any event, you should list your unemployment income should on your return. Your state unemployment office should send you the 1099-G form listing that amount, but there are ways to request the form in the mail.
Tips
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If you have received unemployment income at any point during the year, you will be required to complete and return IRS Form 1099-G. This document will accurately summarize your unemployment compensation and ensure that you are taxed appropriately. You can collected Form 1099-G by calling your local unemployment office or contacting the IRS directly.
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Types Of Disability Policies
There are two types of disability policies.
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Short-term policies may pay for up to two years. Most last for a few months to a year.
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Long-term policies may pay benefits for a few years or until the disability ends.
Employers who offer coverage may provide short-term coverage, long-term coverage, or both.
If you plan to buy your own policy, shop around and ask:
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How is disability defined?
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How long do benefits last?
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How much money will the policy pay?
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Do I Have To Pay Taxes On Business Relief Loans
Paycheck Protection Program loans are exempt from federal and state taxes, and small businesses can deduct business expenses that were paid with tax-exempt loan proceeds for both state and federal tax purposes, under the federal appropriations act that reauthorized the PPP program and a February announcement by Murphy.
This decision is designed to help already beleaguered small businesses, which are the majority of recipients of these loans, Murphy said. Its no secret that New Jersey has been one of the hardest hit states by COVID-19 and our small businesses have shouldered the brunt of it. PPP loans helped many stay afloat and this move will provide added benefit to help them weather this storm.
How Do I Know If I Qualify For Unemployment Benefits
The Pandemic Unemployment Assistance program was made to help workers who wouldnt otherwise qualify for unemployment insurance, like self-employed and freelance workers. If you dont otherwise qualify for regular unemployment insurance, you may qualify for benefits under PUA. If you can prove that youve lost work due to the COVID-19 crisis or otherwise had to stop work to care for a family member, you might be able to get benefits. If you believe you are eligible, you should apply in the state where you last worked.
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How To Get Cobra
Group health plans must give covered employees and their families a notice explaining their COBRA rights. Plans must have rules for how COBRA coverage is offered, how beneficiaries may choose to get it and when they can stop coverage. For more COBRA information, see COBRA Premium Subsidy. The page links to information about COBRA including:
Unemployment Eligibility From Previous Employment
If your business is not set up as a W-2 employer, all may not be lost.
Roberts explains, “If you only recently started working for yourself, your previous employment would actually be examined to determine eligibility. There’s a minimum base period of a year in almost every state. This means that the earliest four of the last five complete quarters of the calendar year will be examined to determine both eligibility and benefit amount.”
If you don’t have enough work history to use under this rule, your state may have exceptions where you can qualify with less work history, so be sure to check your state laws and requirements.
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The Ins And Outs Of Filing Taxes For Your Small Business
Filing taxes as a small business owner can be daunting. Not only do you have to file individual and corporate taxes, but you also might have to file payroll, unemployment, excise taxes and more.
Its not easy to make sense of which forms you have to file and which taxes you need to pay. To help you with this, heres an overview of the taxes small business owners need to know about and how they report them.
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Unemployment Benefits Under The Cares Act
The federal government has expanded unemployment benefits under the Coronavirus Aid, Relief, and Economic Security Act .
Self-employed workers who are usually ineligible for unemployment benefits including independent contractors, sole proprietors and gig workers may now be eligible. They may also qualify for additional money: the new law provides an extra $600 a week in unemployment compensation and extends benefits for 13 weeks .
Eligibility and guidelines vary by state, and you may be eligible if you are self-employed and have lost income due to coronavirus measures, or youre unable or unavailable to work for reasons related to COVID-19, such as being quarantined or caring for a sick family member.
Under normal circumstances, states require you to seek work each week that you file a claim, but the CARES Act provides flexibility if you are unable to because of COVID-19.
Due to the launch of new unemployment application systems and a surge in the number of people claiming unemployment benefits in recent weeks, some states arent yet able to process new claims and payments may be delayed. But there are signs that early roadblocks to filing for benefits are beginning to lift.
Contact your states unemployment insurance office to learn about who can collect benefits, how to file a claim and if any delays are expected.
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Employees Paid Through A Professional Employer Organization
Each Professional Employer Organization which co-employs one or more individuals with a client in Tennessee must complete and file the Report to Determine Status, Application for Employer Number . The PEO will then be assigned an Aggregate State Number. In addition, the PEO must file an Application for Client Number for each Tennessee client and must notify the Department of Labor and Workforce Development in writing of any client additions or deletions during the quarter in which the change occurs.
The PEO must keep separate records and must file separate quarterly Premium and Wage Reports for each client under their Client Number. The clients premium rate each quarter will be the premium rate for the PEOs Aggregate State Number. Detailed information on how the premium rate for the Aggregate State Number is calculated is provided in the Handbook for Employers.
New employer premium rates apply to PEOs that do not qualify for rates based on their own experience. The new employer premium rate will be assigned based on the reserve ratio of the PEOs 2-digit NAICS classification.
A client is jointly and severally liable with the PEO for premiums on all applicable employee wages covered under the professional employer agreement unless the PEO has posted a $100,000 corporate surety bond with the Administrator of the Division of Employment Security.
What Is The Maximum Unemployment Benefit In Ny For 2022
On the first Monday in October 2019, a $504 maximum benefit rate will be implemented. On January 3, 2022, the minimum benefit rate will be $116, according to the Social Security Administration. More information about this fact sheet can be found at www.labor.ny.gov/uihandbook, and there are several examples.
The state of Florida is using the federal EB program to extend the maximum number of weeks an unemployed person can receive unemployment benefits to 13. This change is due in part to New Jerseys unemployment rate, which was reported on April 17, 2021, triggering the release of up to 13 weeks of EB. Because of the states declining unemployment rate, the program will end on April 9, 2022. I believe it is a good decision for them to use the federal EB program as a template for their own. EB has proved to be a successful program for extending benefits to the unemployed. Florida is following in the footsteps of New Jersey, which has proven to be a successful model. Despite the programs end in 2022, the state is following the same model as New Jersey, which has been a huge success.
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Revisions To Arizonas Unemployment Taxable Wage Base
On June 30, 2021, Governor Doug Ducey signed Senate Bill 1828, which increased the maximum taxable wages from $7,000 to $8,000 for Unemployment Insurance compensation purposes, effective calendar year 2023. Senate Bill 1828 has already led to significant changes for claimants who receive benefits, including a reduction of the number of weeks for which claimants are eligible for benefits. This legislation also made other changes to the UI program, including additional program integrity requirements.
In Arizona, you are currently required by law to pay UI taxes on the first $7,000 in gross wages paid to each of your employees in a calendar year. Beginning January 1, 2023, you will be required to pay UI taxes on the first $8,000 in gross wages paid to each of your employees.
The increase will be in effect when you file your quarterly Unemployment Tax and Wage Report for the quarter ending March 31, 2023, for wages paid during January, February, and March of 2023.
IMPORTANT: The increase to the taxable wage base does not impact wages paid to your employees during calendar year 2022.
For additional information, including general information about Arizonas UI Tax program, please call 771-6606.
Termination Of Corporate Officer/owner Status
A corporation is considered viable unless it has permanently ceased operations and filed for formal dissolution in accordance with the New Jersey Business Corporation Act or has filed for bankruptcy under Chapter 7 of the United States Bankruptcy Code.
Upon termination of corporate officer/owner status, you may be entitled to unemployment benefits. You must produce written evidence including one or more of the following:
- A signed statement from the corporation verifying the termination of corporate officer status
- A copy of the Tax Clearance Certification and a copy of the application for final dissolution
- Deed of assignment of assets for the benefit of creditors
- A copy of a petition to bankruptcy court under Chapter 7
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