There are several types of business taxes to keep in mind if you’re starting a new business. Remember, the structure of your business can determine what types of taxes you will pay. This is a general breakdown of taxes you could see.

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Income Tax

The government uses income tax to bill individuals for their earnings (from wages or investments), in proportion to their level of net income. All businesses except partnerships must file their income tax return annually. Partnerships must file an information return.

Throughout the year, employers withhold money from a portion of each employee’s paycheck. These withholdings go to paying your federal income tax. If the income withheld from your paycheck is more than the amount you owe the government, you could receive a refund. But if the income withheld from payroll is less than the amount owed, you must pay the IRS the difference.

Employees who don’t pay taxes through withholding may have to pay extra estimated tax.

Self-Employment Tax

Self–employment tax, or SE tax, is a Social Security and Medicare tax paid by individuals who work for themselves or own their own business.

You qualify for SE tax if your net earnings from self employment were $400 or more for the past year, or if you made more than $108.28 by working for a church or church-controlled organization that chose exemption from Social Security obligations.


Employment Taxes

Employers have the following tax responsibilities:

  • Social security and Medicare taxes

  • Federal income tax withholding from employee wages

  • Federal unemployment tax (FUTA)

Employers have the dual responsibility of accurately depositing and reporting federal income taxes, federal unemployment taxes, social security taxes and Medicare taxes. Employers must choose between two deposit schedules at the beginning of every calendar year. They can either deposit federal taxes on a monthly or semi-weekly basis. FUTA Tax deposits are generally due within the month after each quarter. Reporting requirements must be made quarterly for either federal income taxes or social security and Medicare taxes. These reports are generally made on Form 941. Employers may also need to report employee tax wages at the end of the tax year through W-2 Forms and W-3 Forms.

Excise Tax

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.

Forms for excise tax include:

  • Form 720 quarterly federal excise tax return, which encompasses a few broad categories of taxes

  • Form 2290 heavy highway vehicle use tax return

  • Form 730 monthly tax return for wagers

  • Form 11-C occupational tax and registration return for wagering

For more information about business taxes, go to

Get started Incorporate Your Business Answer a few questions. We'll take care of the rest.

Get started Incorporate Your Business Answer a few questions. We'll take care of the rest.