If you start your own small business, you need to prepare for taxes. They can be an unpleasant surprise if you don't prepare for them, and federal excise taxes for qualifying businesses can be particularly so. Most businesses actually pass on excise taxes to customers so that they can avoid profit loss. Regardless of whether you do this, you will be liable for the full amount based on the quantity that you sell, not the price that you sell it.
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Excise taxes are specific to products. They are most commonly involved in the sale of goods linked to petroleum, alcohol, tobacco and firearms. One of the newer additions to the federal excise tax laws is tanning service providers, which are classified as any business that offers some form of indoor tanning.The tax itself varies between 0.5 percent and 12 percent, depending on what your business involves.
The IRS maintains a directory of all the businesses and industries that must file federal excise tax returns. Transportation based businesses, even if they focus primarily on stationary auto parts, must also pay the appropriate excise tax. Many weapons' manufacturers must also pay these taxes. You must file a 720 form in addition to your taxes when paying. Most of the time, the government requires that you pay your excise taxes on a quarterly basis with the final filing date within one month of the end of each quarter. However, if you only sell small amounts of these products, the IRS may grant you a delay until the tax liability is sufficiently high.
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